Escrow closing in an apartment building purchase: release the price safely

An escrow arrangement should release the purchase price only after the agreed conditions are met. In an apartment building purchase, these may concern title, discharge of encumbrances, documents, handover and open tenancy matters. The key is not the label escrow, but a precise and verifiable release mechanism.

Describe release conditions precisely

The purchase agreement and escrow arrangement must connect both sides’ performances. Section 1052 ABGB reflects the principle that performance and counter-performance can be linked. The actual release still requires concrete evidence and responsibilities.

The preparation of the data room, disclosure and guarantees provides the factual basis. Escrow translates those points into release conditions.

Align title and discharge of encumbrances

A discharge condition is clear only if the required deeds, cancellations or ranking arrangements are identified. The same applies to original documents, keys, leases and outstanding management records.

Phrases such as proper closing are of little help when one document is missing. List each condition, evidence and the process for late or incomplete documents.

Secure documents and handover as conditions

The contract should address partial releases, retentions and a dispute over one condition. This does not eliminate every conflict, but it prevents one vague condition from controlling the entire closing.

Rent arrears, pending proceedings or incomplete cut-off figures may need to be linked to a guarantee, retention or cure. The effective-date settlement shows which figures may matter.

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