Escrow Agreements in Turkey
What is an Escrow Agreement in Turkish Law?
An escrow agreement in Turkish law involves a neutral third party, known as the escrow agent, who is entrusted with holding funds or assets from the buyer. This arrangement continues until the seller fulfills specific, predefined conditions. Upon satisfaction of these conditions, the escrow agent then releases the assets to the seller.
Who are the Parties to an Escrow Agreement?
Escrow agreements in Turkey are typically trilateral agreements, involving a Turkish escrow agent, the buyer, and the seller.
Who can be an Escrow in Turkey?
Depending on the type of contract, a bank, a lawyer, or a government-appointed person or entity may act as the escrow agent.
Defining the Conditions in an Escrow Agreement in Turkish Law
Conditions for the release of funds or assets may vary depending on the type of contract between the buyer and the seller. For example, for the international sale of goods, the conditions are satisfied usually with the delivery of the original bill of lading to the escrow. In any case, conditions for releasing assets or funds should be explicitly stated. Terms should outline procedures for resolving disputes.
What Happens when the Conditions in the Escrow Agreement are met?
When the Seller satisfies the conditions specified in the escrow agreement, the Escrow releases the funds or assets to the Seller without needing additional action or permission from the Buyer.
What Happens if the Conditions in the Escrow Agreement are not met?
If the Seller does not satisfy the conditions specified in the escrow agreement, the Escrow returns the funds or assets to the Buyer.
What Happens if the Escrow Violates the Agreement?
Turkish Escrows are bound by the legal and the criminal code to abide by the escrow agreement. In the unlikely event that an escrow violates the escrow agreement, the escrow is legally liable for any damages that are caused to both parties. More importantly, if an escrow willingly violates the agreement, depending on the type of agreement, the escrow would be criminally liable for the crimes of either Breach of Trust or Abuse of Duty, both punishable by imprisonment.
Advantages of Hiring an Escrow for Transactions
A Turkish escrow agreement ensures protection against fraud and default. It offers security for transactions, particularly in real estate.
Furthermore, an escrow agreement under Turkish Law allows a neutral party to oversee the transaction, ensuring clarity in those transactions. When there is a neutral party who is acting as an escrow, given that escrows are usually competent professionals such as lawyers, the risk of misunderstandings and miscommunication between the buyer and the seller is minimized.
In conclusion, escrow agreements in Turkey offer a reliable framework for conducting secure and transparent transactions. Whether in real estate or other financial dealings, these agreements offer a layer of protection for all parties involved. It’s crucial to understand the legalities and choose the right escrow agent to ensure a smooth transaction.
Antalya Lawyer Baris Erkan Celebi and his Antalya Law Firm offer escrow services in Turkey for all private law contracts. These services include diligently reviewing the commercial contract upon which the escrow agreement is to be based on, assisting the negotiations between the parties, drafting the escrow agreement under Turkish law and finally performing the escrow services as per the agreement.
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