The escrow It is nothing more than a contract, where one or more people decide to transfer their goods, present or future rights that are their property, and even large amounts of money to a third party, who will be in charge of managing or investing said assets for their own benefit or for others.
When this formality begins, none of the parties that make it up is the owner of the object of the management, therefore, This would have a specific legal purpose, which is entrusted for the realization of said purpose in any business.
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It is an instrument that has been used for decades, and that even today is still very important, especially to develop different ventures, especially real estate with the funds of a third. In general, the companies or institutions that provide this service are in charge of providing the funds to buy land and meet the costs of the required works.
In this article you will find:
Parties that make up a trust
It is made up of various parts or participants, each one fulfilling a specific and necessary function so that it can function optimally.
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Trust
It is the one who receives the property or goods that are determined for the benefit of whoever is designated for it in the contract. In the case of a financial trustee, it is the entity or company that is authorized to carry out said procedures.
Trustor
It is the natural or legal person who is responsible for transmitting the properties, both assets and rights that are determined to the trustee.
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Trustee
It is about who actually acquires the property in full once the trust is finalized.
Investors or Beneficiaries
They are the beneficiaries of the contract in the trust, in the holders of the representative securities of the debt (VRD), or on the other hand of the certificates of participation (CP) within the equity of the trust.
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How are trusts classified?
There are 3 types of trusts, which fulfill different functions and are used on different occasions.
Warranty
It is the contract by means of which the settlor can transfer the ownership of one or more goods, resulting in guaranteeing with this or with its product, the total fulfillment of its obligations. This can be done at your own expense or by a third party, and in the event of any breach, the guarantee must be paid at first.
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Financial
This case occurs when the trustee is an entity specially authorized for these procedures, and acts as heir or beneficiary as required by the characteristic values of the debt or certificates of participation.
These in turn are divided into two branches:
- Public financial trusts: are those where the securities issued in the debt are placed in a public offering.
- Private financial trusts: these are those where the investments required for the purpose of the arrangement to be adequately fulfilled is obtained privately.
Of administration
It is the necessary contract so that the trustor can deliver the assets to the agent so that he can begin with the administration, management and monitoring of the project in question.
When is the termination of a trust?
It can be considered that the achievement of the objectives stipulated in the fair agreement has already been completed at the expiration of the term indicated therein or when all the conditions have been met concretized.
Considering that the trust has concluded successfully in the foreseen time and that it has served the purposes that all the parties wished must enter into liquidation, this can be given in two shapes:
- Trust liquidation: consists of carrying out the necessary transactions to cover the previously planned disbursements in a way that everyone has an advantage over the situation
- Delivery of the goods: after a certain time has elapsed or the condition established in the contract has been fulfilled, the owner of the domain must deliver the place to whom it corresponds
Trust advantages
Beyond the relevance that it has been gaining in the market, it is important to take some data into account, to find out if it really is the best option to carry out a project or run a business small.
One of the main advantages of this method is that, although there may be losses in the activity or business to be undertaken, these will be supported by the assets that are affected and not with the total equity of said parts.
Another point in its favor is that it is a very flexible and versatile instrument despite being quite complex. It allows a large number of businesses to be carried out, providing greater security than other alternatives.
It should also be taken into account that, in the event that the administrator assigned to take care of the physical tasks does not act as expected or corresponds, it can be replaced through a small assembly among the beneficiaries, looking for another that, if it complies with what is required, without going through legal expenses.
