[thelist] Escrow Services

[Marc. S.]

Hi Hershel,

If you do go the 'letter of credit' route, you should note that there
are apparently two types of this - revocable and irrevocable letters
of credit. I can't give you professional advice on this, but certainly
seems that you want the latter. You can ask your bank what the
differences are, but here's a quick read -
http://www.crfonline.org/orc/cro/cro-9-1.html

I can understand your client being cautious if he has indeed been
screwed before, but really requiring a downpayment is becoming a
standard in this industry and it's entirely possible that he himself
was to blame for this bad fortune  - through lack of due diligence
before employing the developer perhaps.

You also shouldn't have to pay for the sins of others, so I'd also let
him know that while you understand his concerns, your business is on
the clock, so to speak, and you will need to include an administrative
fee in your costs for this.

regards.
-marc

On 1/10/07, Hershel Robinson <hershel at galleryrobinson.com> wrote:
> I am in discussions with a new client about a project he has. He says
> that he began this project with another party and provided them with a
> down payment, and they then disappeared. He is not extremely wary of
> dealing with another situation of the sort.
>
> I also am not prepared to begin without some concrete indication that he
> is able to pay. He therefore has suggested that we setup an escrow
> situation. My lawyer said that he could provide such a service, but his
> fees are 5% of the funds, from EACH party, which is quite high.
>
> My US bank does not provide such a service, so he says that he could
> provide a Letter of Credit from his bank in Ireland, which include the
> condition that the bank releases the funds to me when the work has been
> done. I am a bit concerned about this arrangement.
>
> I think I will seek out another lawyer who can handle this for a smaller
> fee, but I also wanted to ask if anyone has ever had such a situation,
> and how did you handle it?
>
> If what he says is true, then I am not surprised that he is being very
> careful with his money, so that aspect is not worrisome. I simply am
> *always* very careful with my time, and try not to invest it unless I am
> fairly certain that I will be paid in the end. :)
>
> Thanks,
> Hershel
>