Tripartite Escrow Agreement fee is
only 1½% of the contract amount.
Escrow fee
for a completed IRS §1031 exchange is 1½% of escrow funds.
Fund Control cost is 1%
of the contract amount for contracts over $250,000.
If you are a small-sized contractor, you are often unable to submit proposals or offers to Federal Government agencies or departments. This not only shuts you out of the competition, but also denies the government the benefits of working with smaller companies, that offer more individualized attention, quicker response time and lower costs. Pursuant to the Federal Acquisition Streamlining Act of 1994, Public Law 103-355 and 41 U.S.C. 431 Tripartite Escrow Agreements are approved as an alternative payment protection for federal government contracts up to $150,000. For more information on this Act click here. This law created Tripartite Escrow Agreements to increase the business opportunities among small-sized contractors, while presenting the government with more available contractors.
PAYMENT PROTECTION OPTIONS
A contractor now has five (5) alternative payment protection options, per Federal Acquisition Regulation Part 28 Section 102, (for more information on FAR §28.102, click here), and Defense Federal Acquisition Regulation Part 52 Section 228-13, (for more information on DFAR §52.228-13, click here), the options are:
1. Payment bond
2. An irrevocable letter of credit.
3. A certificate of deposit.
4. Other deposits for the type of security listed in FAR 28.204-1 and FAR 28.204-2.
OPTION #5
Tripartite Escrow Agreement
There is a better choice. Pursuant to the regulations FAR §28.102 and the DFAR §52.228-13 the Government authorizes Tripartite Escrow Agreements in lieu of payment bonds, and other indicated payment protection alternatives. To utilize the Tripartite Escrow Agreement the fee is only 1½% of the contract. With the Tripartite Escrow Agreement no financial statements, tax returns, working capital or work experience are needed to be approved. If you have a Tripartite Escrow Agreement as an option in your solicitation, you can save money and time, and the financial restrictions of an irrevocable letter of credit or certificate of deposit, (For a general overview of the Escrow Process, click here.).
1031 EXCHANGE
We are a qualified intermediary, facilitator and accommodator for the IRS §1031 Exchange. An IRS §1031 Exchange is also known as a Tax-Deferred Exchange, Like-Kind Exchange, Real Estate Exchange or Starker Exchange.
The security of your funds is of the utmost importance to us, and is not something you should have to worry about while completing your IRS §1031 Exchange. Here's what we can do for you, (for more information, click here )
Participating companies for IRS §1031 Exchange:
- Client funds are deposited in California Bank and Trust.
- Tripartite Escrow Corporation is the qualified intermediary.
1) The Bank: Although California Bank and Trust is financially strong and very well capitalized the only real safety for bank accounts today is FDIC (Federal Deposit Insurance Corporation). California Bank and Trust possesses the FDIC's Transaction Account Guarantee Program and all its escrow accounts are FDIC insured. Coverage is $250,000 for each account.
2) The Qualified Intermediary: For the ultimate protection of funds is an Escrow Agreement. This is a separately signed agreement between the exchanger (you), Tripartite Escrow Corporation, and California Bank and Trust, which requires your written approval of any withdrawal of the IRS §1031 funds. At the same time, California Bank and Trust maintains control of the IRS §1031 funds, thereby meeting the IRS's §1031 requirements.
Note: The Escrow Agreement is signed by all parties at the time of closing of the relinquished property. When the IRS §1031 funds are wired into the escrow account, California Bank and Trust places a hold on the account. Thereafter, when the exchanger is ready to close on the replacement property, a Payment Authorization Form is signed by you, authorizing the bank to release the specified amount from the escrow account,as requested by Tripartite Escrow Corporation. Quite simply, the exchanger will have to authorize any use of their IRS 1031 funds. The escrow service fee for a completed exchange is 1½% of the total amount of funds held in the escrow account.
FUND CONTROL FOR CONTRACTS OVER $250,000
The utilization
of funds control, often referred to as funds disbursement or funds
administration, on a construction project can be requested by a
surety company under various circumstances. In general, funds
control enlists the services of a 3rd party organization to oversee,
collect and disburse the monies collected on a job throughout the
course of its completion.
Upon being awarded a contract which will be fund controlled, a funds
disbursement service agreement is executed between the contractor
and the fund control company. This agreement sets forth the
requirement that all contract proceeds will be sent directly to
Tripartite Escrow Corporation and
that the job costs, as well as overhead and fees, will be disbursed
by Tripartite Escrow Corporation
during the course of the project.
Prior to the first
progress payment being collected,
Tripartite Escrow Corporation and the contractor review the
project cost estimates, budgets, contract documents and the draw
schedule with the project owner. Upon payments being remitted to
Tripartite Escrow Corporation, they
are deposited into a escrow account. In general, upon receiving each
progress payment, Tripartite Escrow
Corporation typically requests Payment Authorization Form
pertaining to the checks a contractor is requesting to be paid
during that pay period. Tripartite Escrow
Corporation will draft checks payable to all subcontractors,
suppliers and other vendors and will forward them to the contractor
for disbursement. In addition, payment to the contractor for an
agreed amount of profit and overhead will be distributed, as well. A
contractor is responsible for the payment of payroll and
miscellaneous operating expenses throughout the duration of the
contract. Prior to all payments made from
Tripartite Escrow Corporation, they often require lien
releases from all subcontractors and vendors for the prior month’s
draw. Only incurred costs for a particular billing period and the
agreed overhead and profit percentages will be paid during each
progress payment. Over billings will be retained by
Tripartite Escrow Corporation and
payment of any shortages for under billings will be the
responsibility of the contractor.
Upon completion of the
project, the contractor should have already been reimbursed all
costs associated with the job, as well as the profit and overhead.
Should additional funds remain in the account, they will be
immediately disbursed to the contractor. The escrow service fee for
a completed Fund Control is 1% of the total contract amount.