15 years of escrow legislation: 867 billion baht in transactions
Data released by the Fiscal Policy Office (FPO) has shed light on the impact of escrow legislation over a 15-year span. According to an anonymous FPO source, escrow service transactions during this period totalled a hefty 867 billion baht, the majority of which were linked to capital market transactions.
The Escrow Account Act came into effect in 2008, and from then until the second quarter of the current year, the collective worth of escrow service transactions hit an impressive 867 billion baht. Capital market transactions made up the lion’s share of this total, contributing 862 billion baht or 99.5% of the overall value. Product and service purchase transactions, on the other hand, made up a mere 0.38% of the total, accounting for 3.3 billion baht.
Real estate transactions, despite being a key target of the escrow legislation, comprised only 852 million baht, a mere 0.10% of the overall transaction value. The FPO source indicated that the uptake of escrow services within the real estate sector remained surprisingly low throughout the 15-year period.
The Escrow Account Act was implemented to stave off potential fraud and deception that could impede business transactions and destabilise the country’s economy. As a protective measure for both buyers and sellers, the law stipulates the appointment of a neutral third party to safeguard the interests of all parties involved in a contract.
An escrow account operates as a form of contract wherein parties involved in transactions such as real estate purchases agree on payment through a temporary account held by a third party, known as an escrow agent. The agent is responsible for monitoring the fulfilment of contractual obligations by all parties until the terms of the contract have been met.
The escrow agent is entrusted with the care of money, property, securities or other assets tied to contractual obligations and is responsible for ensuring the successful transfer of ownership or property rights. As per the law, only commercial banks and finance companies can serve as escrow agents, and they are entitled to charge a fee for their services.
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