Attorney Escrows – New Rules
In certain projects such as, real estate transactions it can be in the best interests of clients to use an escrow mechanism. There are different types of escrows, whereas an attorney escrow is one of them. The provision of such services is subject to specific regulation by the Czech Bar Association (the “CBA”). It aims to ensure maximum transparency and provide a high level of protection of the clients’ financial means. Recently new rules that should further help to achieve this goal were introduced.
Besides additional reporting obligations towards the CBA for attorneys, a new interesting tool has been introduced. Before an attorney accepts financial means into an escrow account he/she has to inform the client in writing about possibility of monitoring movements and balances on the escrow account in accordance with the options of the bank holding the escrow account. This enables clients to perform their own control over the escrow account. If the respective bank offers such notification service and the client wishes so, the attorney will arrange for this service and will grant the bank a necessary consent that cannot be cancelled during the whole escrow period.
Further, the attorney may provide the CBA with an email address of the client. The CBA will then inform the client on whether the attorney fulfilled his/her obligation to inform the CBA about receipt of the financial means into the escrow and subsequently about disbursement of the financial means from the escrow. All the above should improve the position of clients and contribute to even more transparent and safe attorney escrows.
Mgr. Bc. Jaroslava Novotná