Escrow
Sheet under review by our engineersEscrow is like entrusting your money to a neutral third party (a bank, notary, or lawyer) who keeps it safe. They will only release it to the contractor once certain conditions are met, for example, after a construction stage has been validated.
Why it matters for your home
This is a golden protection, especially if you're building remotely! Your money is secure, and the contractor is assured of being paid if they do their job well. It's a guarantee of trust for both parties and it greatly reduces the risks of scams.
The African context
Although less common for small individual constructions, escrow is an ideal solution for the diaspora. Unfortunately, finding a trusted third party willing to act in this role can be a challenge, but it's worth the effort.
Red flags
- ⚠ The contractor categorically refuses the idea of an escrow mechanism without providing a valid reason.
- ⚠ You're offered a 'trusted third party' whose ties to the contractor are dubious or unknown.
- ⚠ The contract does not mention any procedure for the release of funds by the escrow agent.
Questions to ask
- 1. "Are you open to using an escrow mechanism with a trusted third party (bank, notary) to secure payments?"
- 2. "What would be the precise conditions for the release of funds at each stage (for example, validation by an independent architect)?"
- 3. "Have you worked with escrow arrangements before?"
Related terms
At this stage of your project?
An independent DiasporaBuild inspector can verify on site before you pay.