What is a Escrow or segurity Deposit Account?

It is an account that is used to receive the initial deposit or “good faith deposit” of a transaction and is made through a title company or the attorney in charge of the process. That is, the money does not go directly to the seller but is kept impartially until the end of the purchase. The deposit is made to formalize the commitment to purchase the property. Usually, the amount of the deposit ranges from 5% to 10% of the purchase value, depending on what is agreed with the seller.

When is the good faith deposit paid?

The contract will stipulate how many days the buyer will have to make this deposit. They are usually made the day after an offer is signed by the buyer and seller (executed offer). After the seller accepts the offer, the deposit will not be returned unless one of the clauses of the contract is not met. The escrow deposit funds are used at the end of the transaction in favor of the buyer.