Escrow agent service offered in NY.

Escrow agent service offered in NY

A new, innovative escrow service for New York-area attorneys and their real estate and business clients, with the potential for revolutionizing the way hundreds of thousands of escrow transactions are carried out each year, has been launched by a new company, First Independent Escrow, Inc.

First Independent Escrow (FIE), founded by attorney Howard J. Kopel and financial advisor Baruch Halpern, serves as escrow agent in any situation where third-party funds are involved in a transaction. Fully bonded, the company specializes in providing attorneys with a reliable, safe and prudent alternative to setting up and maintaining escrow accounts on their own.

FIE's service eliminates the attorney's responsibility and liability concerning an escrow account. With FIE, attorneys are relieved of the time-consuming escrow chore, for which they generally are uncompensated. FIE takes attorneys out of "the escrow loop," avoiding the conflict-of-interest that exists under current practice.

When FIE is named escrow agent, it immediately takes full responsibility for the escrow funds, Halpern explained. FIE has gone to great lengths, he said, to develop banking relationships and instruments which will assure that every dollar it deposits is either FDIC insured or backed 100 percent by government instruments. It also does all the bookkeeping, tracks the flow of funds, issues regular reports and handles the escrow disbursement at the closing.

FIE's escrow service, he noted, is carried out at no cost to the attorney and at a modest fee to the parties in the transaction. The fees are offset by the yield that FIE obtains from its escrow banks and investments, which generally exceeds the yield obtained by attorneys under the current escrow system by 50 to 100 basis points.

FIE's Kopel pointed out that use of an independent escrow agent is new to New York where generally the seller's attorney serves as the escrow agent. He noted that independent escrow agents have been widely used in California and elsewhere, and that their use is a tested method of protecting deposits and facilitating a transaction.

Kopel explained that under the current system in New York, an attorney acting as an escrow agent must deposit the money into a non-interest bearing "Interest on Lawyer's Account" (IOLA), or in an individual interest-bearing client account. As escrow agent, the attorney also handles the record-keeping and disbursement activities, and must reconcile all bank accounts, communicate with the bank and report to his client. After the transaction is closed he must maintain the records for seven years, and he may be subject to state audits.

FIE, he said, does all of this when it is named escrow agent. The attorney for either party in a transaction forwards the escrow to FIE and his job is done.

The FIE principals believe their company creates a "win-win" situation for the attorney and all the parties to a transaction: The attorney is relieved not only of a chore that is costly in terms of time and expense, but of the liability. Meanwhile, the buyer and his or her attorney know that the deposit is secure and safe, earning interest and is in the hands of a bonded, independent agent which represents both parties equally.

Kopel and Halpern are professionals with four decades of combined experience in law, real estate and money management. Mr. Kopel was the founder of Select Abstract Corp., a title insurance agency, and of the law firm of Kopel, Halberstam and Barenbaum, a firm practicing litigation, corporate, real estate and criminal law. Select Abstract has placed more than $250 million of title insurance over the last several years. As part of its services, Select Abstract collects and disburses large amounts of third-party funds for purposes related to property closings.

Halpern is a chartered financial analyst and executive officer of Halpern Capital Management, an investment advisory firm. He has extensive accounting and Wall Street experience and managed the accounting department of a $550 million division of a "Fortune 100" company. He also has managed the employee benefits programs of a major American chemical and textile manufacturer involving $300 million-assets of pension and profit sharing plans. He also has served as investment advisor and as the research director of a group that managed $1 billion in assets.