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An Escrow Agreement creates a secure three-way arrangement where a trusted third party (the escrow agent) holds and manages assets or funds until specific conditions are met. In Saudi Arabia, these agreements commonly involve banks or licensed financial institutions acting as escrow agents, especially in real estate and major business transactions.

The agreement protects all parties by clearly defining how and when the escrow agent should release the assets. Under Saudi commercial law, escrow arrangements have become particularly important in off-plan property sales, where developers must maintain separate escrow accounts to safeguard buyers' payments throughout the construction process.

Use an Escrow Agreement when you need a secure way to complete high-value transactions, especially in Saudi real estate development. These agreements become essential for off-plan property sales, where buyers need protection for their advance payments during construction. They're also valuable for major business acquisitions, international trade deals, and complex commercial contracts where trust needs extra safeguards.

The Saudi real estate market specifically requires escrow accounts for development projects, making these agreements mandatory for property developers. Consider using escrow arrangements when dealing with substantial deposits, staged payments, or transactions where performance conditions must be met before funds can be released.

• Real Estate Escrow: Most common in Saudi property development, these agreements protect buyer payments during construction and specify milestone-based releases
• Commercial Transaction Escrow: Used for business acquisitions and mergers, holding funds until due diligence and conditions are met
• Import-Export Escrow: Safeguards international trade transactions, ensuring payment security for both Saudi importers and foreign exporters
• Digital Asset Escrow: Emerging type for technology transfers and software development projects, protecting intellectual property and payment releases
• Construction Project Escrow: Specialized agreements for large infrastructure projects, managing contractor payments and performance guarantees

• Licensed Escrow Agents: Saudi banks or authorized financial institutions that hold and manage the funds or assets under strict regulatory oversight
• Property Developers: Must establish escrow accounts for off-plan sales and comply with Real Estate Development Fund regulations
• Buyers/Investors: Deposit funds into escrow accounts for protection during property purchases or major business transactions
• Legal Counsel: Draft and review Escrow Agreements to ensure compliance with Saudi law and protect client interests
• Regulatory Bodies: Monitor escrow arrangements and enforce compliance with Saudi banking and real estate regulations

• Party Details: Gather full legal names, addresses, and registration numbers of all parties, including the chosen escrow agent's licensing details
• Asset Description: Document precise details of funds, property, or assets being held in escrow, including accurate valuations
• Release Conditions: Define clear, measurable conditions that must be met for the escrow agent to release assets
• Payment Terms: Specify escrow agent fees, payment schedules, and any transaction costs
• Regulatory Compliance: Confirm alignment with Saudi banking regulations and real estate development laws before finalizing the agreement

• Party Identification: Full legal names, addresses, and registration details of all parties, including the licensed escrow agent
• Asset Description: Detailed specification of funds, property, or assets being held in escrow
• Release Conditions: Clear triggers and milestones for asset release, aligned with Saudi banking regulations
• Agent Duties: Specific responsibilities and obligations of the escrow agent under Saudi financial laws
• Dispute Resolution: Procedures for handling conflicts under Saudi commercial law
• Termination Terms: Conditions and process for ending the agreement
• Governing Law: Explicit reference to Saudi Arabian law and jurisdiction

An Escrow Agreement differs significantly from a Business Acquisition Agreement in both purpose and structure, though they often work together in major transactions. While both documents play crucial roles in Saudi business deals, they serve distinct functions.

• Primary Purpose: Escrow Agreements focus solely on protecting and managing funds or assets through a third party, while Business Acquisition Agreements outline the entire purchase transaction terms and conditions
• Scope of Control: Escrow Agreements deal specifically with asset safekeeping and release conditions, whereas Business Acquisition Agreements cover ownership transfer, warranties, and post-sale obligations
• Parties Involved: Escrow Agreements require a licensed escrow agent as a neutral third party, while Business Acquisition Agreements primarily involve just buyer and seller
• Timing and Duration: Escrow Agreements typically remain active until specific conditions are met, while Business Acquisition Agreements govern the entire transaction lifecycle and post-closing obligations