Escrow in France: how it works, who can act and what it costs

Key points

• French law has its own escrow: the conventional escrow (séquestre conventionnel) of articles 1956 et seq. of the French Civil Code.
• Notaries, banks, payment platforms and lawyers can hold funds; each works within its own regulatory framework.
• A French lawyer must hold client funds through the CARPA, a bar-controlled body: the money sits outside the firm's assets and every payment out is checked.
• The funds are released only when the agreed conditions are met, or on joint instructions, or under a court decision.
• A simple escrow can be set up within a few days; the fees follow a published, tapering scale.

What escrow means under French law

In common-law countries, escrow is mostly a matter of contract. France has a statutory basis: the conventional escrow is the deposit, by one or more persons, of a thing in the hands of a third party who undertakes to return it to whoever is found entitled to it (article 1956 of the French Civil Code). Applied to money, the buyer pays the price to the escrow agent, who holds it until the conditions precedent set in the escrow agreement are met, then pays the seller. For a detailed comparison, see Anglo-American escrow vs CARPA escrow.

Who can act as escrow agent in France?

• Notaries: they hold the funds for the deeds they execute, mainly real estate, through the Caisse des dépôts.
• Banks: some offer escrow accounts, usually for large transactions, with their own internal approval process.
• Payment platforms: online escrow services for consumer sales must be authorised by the ACPR, the French banking supervisor, or act for an authorised institution.
• Lawyers: a French avocat can accept an escrow mission and must hold the funds through the CARPA.

Fidens is the escrow service of Selves & Godesque Avocats, a Paris business law firm: the escrow is held by Maître Martin Estanove, member of the Paris Bar, on a CARPA account.

Why a lawyer's CARPA account

The CARPA (Caisse des règlements pécuniaires des avocats) is the body through which every French lawyer must handle client money. The funds are ring-fenced on a sub-account dedicated to the transaction, outside the firm's own assets; the CARPA checks the purpose and the beneficiary of each payment before it leaves. Add professional secrecy, the ethics of the Bar and the profession's liability insurance. More on the safeguards of the CARPA account.

How a French escrow works, step by step

• Escrow agreement: signed by the parties and the escrow agent, it sets the amount, the release events and the evidence required, the deadline and what happens if the deal fails.
• KYC: identity of the parties, beneficial owners and source of funds are checked, as French anti-money laundering rules require (why and how).
• Deposit: the depositing party wires the funds, from France or abroad, to the CARPA sub-account; receipt is confirmed to all parties.
• Holding: the funds stay put; neither party can move them alone.
• Release: on the agreed evidence or joint instructions, the funds are paid to the beneficiary, in one or several instalments.

Typical uses

Share deals and M&A closings, including holdbacks for warranty claims and earn-outs (escrow at an M&A closing); the sale of a French business, where the price is held during the creditors' opposition period; the purchase of a yacht, a classic car or an artwork; settlement agreements; cross-border deals between parties who have never met. Foreign buyers and sellers use it in particular to avoid paying, or delivering, first.

Cross-border escrow

Funds can be received by international wire transfer. The agreement then specifies the governing law, the competent court, the currency and the bank charges, which remain payable by the parties. Fidens works in French and in English.

Timing and cost

Once the documents are in hand, a simple escrow can be set up within a few days: agreement signed, KYC completed, wiring instructions issued. Fidens' fees follow a tapering scale based on the transaction price: a flat fee of EUR 1,800 covers transactions up to EUR 180,000, then a decreasing rate applies; above EUR 10 million, a bespoke quote is drawn up. Details and examples: how much an escrow agent costs. Funds held at the CARPA do not earn interest for the parties.

Planning a transaction in France? Contact us or book a video call: we will tell you within 24 working hours whether escrow fits your deal and how to structure it.