Do funds held in escrow account earn interest?
In a property transaction, there is an option to purchase which is a legal document allowing the buyer the exclusive right to purchase a property from the seller at a future date. Typically, 1 per cent of the purchase price is paid upfront on the signing of the option, with 4 per cent paid upon a buyer exercising the option. The funds from the 4 per cent are deposited in a conveyancing account, which can be held by a law firm in a bank or with the Singapore Academy of Law. I imagine that there are millions of dollars worth of funds held in such accounts in Singapore, which also serve as floats for the banks. I wonder if any interest is paid by the banks on these funds and, if so, why interest earned on these funds is not paid to the seller as the funds are actually held in abeyance for the seller. Sunil Kumar Ragnath