Legal Question in Business Law in Texas
How long must a service provider hold funds in escrow?
I am a career coaching professional in TX. When my firm is retained, I hold the funds in escrow until the project is complete, then pay the providers. Occasionally clients will retain us, pay the fee, and then disappear. How long must I hold the funds until they ''expire'' and I am free to release them to the business?
1 Answer from Attorneys
Re: How long must a service provider hold funds in escrow?
Assuming the project has not been completed (since the client has disappeared) then the State of Texas would require you to turn the unearned portion of the money over to the state (escheat) which holds it in trust until the rightful owner can be identified. If the owner is identified, he gets the property back, if he is never identified, then the government as trustee for the people sells it to a new owner.
Specifically, when something of value has been in a 3rd party�s hands for 3 years without demand by the true owner, the holder is required to send the property to the state. In fact, the failure to turn the money or assets over to the state can require you to pay a penalty of the value of the asset plus 10%.
For more information please see the Texas Comptroller of Public Accounts website regarding unclaimed property at: http://www.window.state.tx.us/up/
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