Click the tabs below for information on escrow accounts.
For Opening a New Escrow Account, click here.
Definition
An escrow account holds funds paid by a client or group of clients and reserved for payment to another party at a later date. The escrow agent, typically a real estate agent or attorney, can not commingle the escrow funds with his/her own funds. The funds are owned by the client(s) of the escrow agent and controlled by the agent. A Qualified Intermediary Escrow account is established to facilitate a real estate property exchange under section 1031 of the IRS tax code.
Three types of escrow accounts exist:
- Individual client
- Multiple clients
- Qualified Intermediary escrow account
Required Documentation to Open Account
Note: Documentation MUST be provided to Call Me Direct for review and approval prior to opening a fiduciary account.
The documents required to open an escrow account differ by the type of escrow account being opened.
Individual Client
- Escrow agreement from the real estate company or the law firm authorizing the agent or attorney to act on behalf of the individual client as an escrow agent
- W-9 signed by the individual client and owner of the funds
Multiple Client
- Documentation on business entity
All revised accounts require the following:
- CCB affidavit
- Updated/revised by-laws or meeting minutes documenting required changes
Qualified Intermediary Escrow
Documentation on business entity
- Qualified Intermediary and Escrow Agreement authorizing the 1031 real estate transaction and establishing the qualified intermediary
- Assignment of contract rights
- CCB affidavit
- Updated/revised by-laws or meeting minutes documenting required changes
Tax Identification Number (TIN)
Note: When the funds are held for a group of clients, use the escrow agent’s TIN for IRS reporting.
Note: When the funds are held for one owner or for qualified intermediary escrow, use the individual owner's TIN for IRS reporting.
If the client does not have an EIN for the estate, direct the client to irs.gov.
Account Titling
Title the account depending on the type of the escrow account as follows:
Individual Client
- Title the account in the owner’s name. {Client's name} auto-populates in the Customer Name field.
- In the Additional Name 1 field enter the name of the (influence) authorized signer (for example: Escrow Account By Remax).
- Check that the owner's provided TIN matches the TIN listed on the account. If it does not, do not open the account.
Multiple Clients
A business can hold funds for more than 1 client or multiple clients deposited into the same account, still keeping the funds separate from its operating funds.
- Title the account in the escrow agent’s name. {Client's name} auto-populates in the Customer Name field.
- In the Additional Name 1 field enter Escrow Account.
- Check that the owner's provided TIN matches the TIN listed on the account. If it does not, do not open the account.
Qualified Intermediary
- Title the account in the escrow agent’s name. {Client's name} QUALIFIED INTERMEDIARY ESCROW auto-populates in the Customer Name field.
- In the Additional Name 1 field enter the name of the authorized signer (influence) As Qualified Intermediary (for example: Bill Jones as Qualified Intermediary).
- Check that the provided TIN matches the TIN listed on the account. If it does not, do not open the account.
Ownership Requirements
The escrow agent is the only signer on the signature card. Signature details are as follows:
Individual Client
- The signature card with the escrow agent's signature above his/her name in the Signatures section
- A separate W-9 form with the individual funds owner's signature, certifying his/her TIN
Multiple Clients
- The signature card with the escrow agent's signature above his/her name in the Signatures section
- Escrow agent verification of the information under the Backup Withholding Certifications section
Qualified Intermediary Escrow
- The signature card with the qualified intermediary signature above his/her name in the Signatures section
- A separate W-9 form with the individual funds owner's signature, certifying his/her TIN
Signature Card Examples
Individual Client
Multiple Clients
Qualified Intermediary Escrow
Relationship Codes
Escrow Individual
- P - Primary (Individual)
- I - Influence (Signers)
Escrow Multiple
- P - Primary (Business Entity)
- I - Influence (Signers)
Escrow Qualified Intermediary
- P - Primary (Business Entity)
- C - Custodian (Qualified Intermediary)