F.A.Q. on contractual escrow

CARPA (the French bar's fund-handling body) is the non-profit organisation through which all funds that a lawyer handles on behalf of third parties must compulsorily pass. It guarantees the safekeeping, traceability and control of the sums, under strict regulation, particularly as regards the fight against money laundering.

Each transaction is held on a dedicated sub-account, specific to your matter. The funds are ring-fenced there, separated from those of the lawyer and of other matters, and every movement is checked by CARPA before execution.

The funds to be placed in escrow are transferred to the order of the CARPA of the Paris Bar, imperatively quoting the file references provided when the escrow was opened. These references allow the transfer to be allocated to the correct sub-account.

No. The financial income of CARPA accounts accrues neither to the client nor to the lawyer: it is earmarked to fund access to justice and legal aid. The escrow is therefore not an investment.

A distinction must be drawn between escrow, which concerns sums of money via CARPA, and deposit, which concerns documents or instruments (a guarantee, a bank surety, securities). The two can be combined in a single arrangement, but are governed by distinct rules.

Yes. The funds can only be released to the person or persons named in the escrow agreement, and only when the conditions it lays down are met. No payment to an unforeseen third party is possible.

Release takes place against the conditions set by the escrow agreement (satisfaction of a condition precedent, transfer of ownership, agreement of the parties), after verification by the escrow lawyer and control by CARPA. For as long as those conditions are not met, the funds remain ring-fenced.

In the event of disagreement, the funds — or the contested portion — remain in escrow. The uncontested part may, depending on the agreement, be released; the balance stays ring-fenced until an amicable settlement or a court decision.

The sums remain in escrow until the parties reach an agreement or until a court decision or arbitral award determines the fate of the funds. The escrow lawyer then carries out the decision.

The fate of the funds depends on the terms of the main contract (sale, financing) and, failing that, on the applicable legal rules. The escrow agreement generally expressly provides for the arrangements for return in the event of non-completion or cancellation.

Funds held on a CARPA account are ring-fenced and immune from seizure by the lawyer's creditors. As between the parties, the allocation of the sums is determined by the agreement: they are deemed to belong to the beneficiary once the conditions are met, which protects them in the most sensitive situations, for example insolvency proceedings.

The escrow agent's remuneration is fixed in advance and agreed between the parties. At Fidens, it rests on a progressive scale — a minimum flat fee, then a tapering rate according to the amount of the transaction — communicated with full transparency before the matter is opened.