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F.A.Q. about escrow agreement

What is CARPA ?

CARPA is the Caisse Autonome des Règlements Pécuniaires des Avocats (independent cash register of french lawyers). It is a non-profit organisation, created by each Bar Association.

Every lawyer has a CARPA account. When a sum of money (other than fees or reimbursement of expenses) is paid to him in the course of his work as a lawyer, he must deposit it in a CARPA sub-account opened specifically for that case, and identified as such.

CARPA controls every inflow and outflow of money and thus guarantees the safekeeping of the sums deposited.

What is a sub-account CARPA ?

Each lawyer has a CARPA account.

This account is divided into sub-accounts, each sub-account corresponding to a case.

The lawyer creates the sub-account and orders its closure.

All financial transactions relating to this case (excluding fee payments and expense reimbursements) pass through this CARPA sub-account.

CARPA controls every deposit made to each sub-account and every payment made from that sub-account. It requests supporting documents for cash outflows and checks them.

It may withhold the sums and ask for explanations from the lawyer in case of doubt, all with the aim of ensuring that the sums deposited are used in accordance with the client's wishes and the law.

Who must be the beneficiary of transfers or other payments to be payed on the CARPA sub-account ?

They must be made payable to "CARPA du Barreau de Marseille".

In case of a transfer, the CARPA Case Code and the case number must be specified, which will be provided by the escrow lawyer. These details enable CARPA to allocate the payment to the correct sub-account.

Does the sequestered money earn interest? Does it benefit the lawyer?

The sequestered money earns interest, but it does not benefit the owner of the money or the sequestration lawyer.

The interest generated by the sequestered money benefits the CARPA, and in particular makes it possible to finance its services (premises, staff, insurance, miscellaneous expenses, etc.).

Can a bank guarantee or documentary credit be sequestered?

It is possible to secure a bank guarantee contract or a documentary credit. However, since we are not talking about a sum of money but a document, we are not talking about escrow agreement, but about deposit agreement.

A lawyer who receives such a document in deposit as security shall retain it until its return or transmission is requested, in accordance with the terms of his mandate of deposit.

Are the sequestered funds reserved for the producer designated in the contract?

Yes, the sequestered funds cannot be paid to any other producer.

 

Indeed, the escrow agreement depends on the contract of sale. The sequestration lawyer is therefore not entitled to pay the sequestered sums to a producer other than the one provided for in the contract.

What should I do if the delivery does not conform to the order?

Within 48 hours of receipt of the order, the buyer must fill in the receipt form.

It is in this form that he must report any non-conformity of the delivery.

In this form, the buyer can, in particular, quantify his loss and propose a solution to resolve the difficulty.

In the event of a dispute on delivery, what happens to the sequestered money?

The amount of the loss as quantified by the buyer remains in escrow.

The balance is paid to the producer, as provided for in the sales contract.

Comment faire lorsque la livraison est non-conforme et que le montant du préjudice de l’acheteur est supérieur au solde disponible sur le compte séquestre ?

Cela dépend du contrat de vente et du contrat de séquestre.

Dans le séquestre que nous avons mis en place avec Bois Etik, si le solde disponible sur le compte séquestre est inférieur au montant du préjudice estimé par l’acheteur, le producteur s’engage à verser le complément nécessaire pour couvrir le montant estimé du préjudice.

Le montant conservé sous séquestre le temps de la résolution du litige ne peut toutefois pas être supérieur au prix prévu au contrat de vente liant l’acheteur au courtier, déduction faite des frais de séquestre, de la commission du courtier, et des frais de production et de livraison de la marchandise.

What happens to the sequestered money if the dispute is not resolved amicably?

If the dispute is not resolved amicably, the money remains in escrow.

It is up to the most diligent party to take legal action to resolve the dispute. The sequestering lawyer will comply with the court decision that will be rendered.

If the contract is cancelled, what happens to the sequestered funds?

The fate of the funds in the event of cancellation of the contract of sale is determined by the contract of sale and, failing that, by law.

 

Thus, for example, the contract may provide that, in the event of cancellation of the contract by the buyer due to late delivery, the sequestered funds are returned in full to the buyer, without administrative costs or commission, which will be invoiced directly to the producer.

 

If the contract cannot be honoured due to a claim declared by the producer or a case of force majeure, the sequestered funds will be returned to the buyer, after deduction of the sequestration costs and, if provided for in the sales contract, the brokerage commission.

The buyer may also prefer a substitution at equivalent price and quality. The broker will then look for a new offer, subject to validation by the buyer.

Can the buyer's creditors seize the sequestered sums, in particular in the event of suspension of payments?

We consider that the producer has committed funds for the supply of the logs or planks being prepared.

 

Consequently, in the escrow we propose, the sums paid are in principle considered as due by the buyer to the producer. They are therefore acquired by the producer, but are placed in escrow until the date contractually agreed for their payment.

The buyer is thus assured that the producer will have to honour the order before collecting the funds, and the producer is assured that his payment is beyond the reach of the buyer's creditors, even in the event of suspension of payment.

Can the sequestration relate to stocks of wood consigned as "pledges on material"?

Yes, this is possible, but the conditions are strict, especially when the stock is not on French national territory.

In order to do this, we need to make a tailor-made study. We urge you to contact the firm directly.

Can the sequestration involve cash?

The sequestration may involve cash. However, it is not possible to deposit an indeterminate amount in a sealed container. The amount must therefore be accounted for by the Receiving Lawyer and then declared, deposited and registered with CARPA.

The amount deposited in cash then becomes a CARPA line item.

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