What is an Escrow Account?

An escrow account is a neutral financial arrangement in which funds are held by a trusted third party on behalf of two transacting parties until the terms of an agreement are met. It ensures security, trust, and transparency by preventing premature or unauthorized release of funds. Once all conditions are verified and fulfilled, the funds are disbursed as per the agreed terms.

This concept is widely used in high-value transactions such as property sales, rentals, business deals, and legal settlements, where both parties seek protection and accountability.

How Does Escrow Work – Step-by-Step

  • Agreement is made between the parties outlining the terms, including payment structure and delivery conditions.
  • Funds are deposited by one party (e.g., a tenant or buyer) into the escrow account.
  • Verification is done by the escrow agent (e.g., HomeAmbit) to ensure that the agreed-upon obligations are fulfilled.
  • Verification is done by the escrow agent (e.g., HomeAmbit) to ensure that the agreed-upon obligations are fulfilled.
  • Digital records and notifications are shared with all parties to maintain transparency and accountability.

How HomeAmbit Uses Escrow in Rental Property Management

HomeAmbit leverages escrow accounts to streamline and safeguard monthly rental payments between tenants and property owners. Here’s how it works in a structured manner:

  • Every month, the tenant deposits the full rent into an escrow account managed by HomeAmbit.
  • HomeAmbit charges an annual Property Management Service (PMS) fee, but instead of collecting it as a lump sum, it is split into monthly deductions.
  • The monthly PMS fee is calculated as (Annual Fee ÷ 12).
  • An additional 18% GST is levied on this monthly fee as per government regulations.
  • The total PMS fee + GST is deducted from the escrow account and transferred to HomeAmbit.
  • The remaining rental amount is then transferred to the homeowner’s bank account.
  • A monthly digital statement is shared with both the owner and the tenant, showing all calculations, deductions, and payouts.

Example:

  • Monthly Rent Paid by Tenant: ₹30,000
  • Annual PMS Fee: ₹12,000 → Monthly PMS Fee: ₹1,000
  • GST on Monthly PMS Fee (18%): ₹180
  • Total to HomeAmbit: ₹1,180
  • Amount Transferred to Owner: ₹28,820.

How HomeAmbit Uses Escrow in Resale Transactions

For resale of properties, HomeAmbit uses escrow accounts to safeguard both the buyer and the seller, minimizing risks and ensuring all conditions of the sale are properly met.

Here’s how the resale transaction works through escrow:

  1. The buyer deposits the full purchase amount into the HomeAmbit-managed escrow account.
  2. The seller submits all legal documents, clearances, and performs the property handover.
  3. HomeAmbit verifies compliance — including legal due diligence, sale agreement, NOCs, and registration readiness.
  4. Once verified:
    • HomeAmbit deducts any pre-agreed service fees or brokerage from the escrow account.
    • The remaining funds are released to the seller’s account.
    • The buyer gets rightful ownership and registration of the property.

Why Escrow is a Game-Changer for HomeAmbit Clients

Whether it’s a monthly rental or a multi-crore resale transaction, HomeAmbit’s escrow mechanism ensures:
– Seamless payment automation.
– Reduced risk of disputes.
– Transparent, GST-compliant deductions.
– Structured reporting and tracking.
In a market where trust and timing are critical, escrow-backed transactions bring peace of mind to both property owners and tenants/buyers.

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