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Why are escrow accounts used when investing through EB-5 regional centers?

Why is an escrow account used when investing in an EB-5 regional center? Does the escrow company have to be a third-party? Do I have to put the $500,000 into the escrow account all at once?

Answers

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    Ed Beshara

    Immigration Attorney
    Answered on

    The EB-5 immigration regulations allow the investor to have already invested (no escrow account is needed) or be in the process of investing (in which investment funds can be placed in an escrow account). All the investments funds required to be invested have to be in the escrow account or the new commercial enterprise before the investor's I-526 petition is filed.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    Escrow accounts are used to hold the EB-5 investment while certain conditions are pending. Some projects hold funds until the I-526 is approved. Some only until the I-526 is filed. Some use it as soon as the subscription procedures are complete (before the I-526 is even filed). Generally, USCIS wants to see the entire amount in escrow or in the project company itself.

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    John J Downey

    Immigration Attorney
    Answered on

    Escrow accounts were used to protect your investment. You put the funds into an escrow account in the United States thereby showing you have invested; however the release of the funds was conditioned upon your receiving an approved EB-5 application. It is not a prerequisite of the program simply a protection that the investor may avail themselves.

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    Robert Lee

    Immigration Attorney
    Answered on

    Escrow accounts are used so the release of funds coincides with an event such as filing the I-526 or having an I-526 approved. All the $500,000 needs to be in the account before you file the I-526.

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    Nelson Lee

    Immigration Attorney
    Answered on

    Escrow is used to offer investors some degree of comfort and security. The use, or non-use, of escrow depends on the individual EB-5 project. Some projects do not use escrow at all and require that your investment funds be deposited directly into an operating account for immediate use, or use upon your filing of the I-526 petition. Other projects have an escrow account, but require that a percentage of the funds be released immediately with the balance to be released upon the USCIS approval of the investor's I-526 petition. As for the funding of the escrow account - this also usually depends on an individual project's requirements/preferences. You will need to read a project's escrow/subscription agreement very carefully to understand if there is an escrow account and if so, how/when it is to be funded and used.

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    Fredrick W Voigtmann

    Immigration Attorney
    Answered on

    An escrow account is not required to process an EB-5 case. In fact, most regional centers and project developers would prefer not to use escrow accounts. The escrow holder usually is a bank or third party that will hold the funds under the terms of an escrow agreement signed by both parties (the EB-5 project and the investor). The funds will be released to the project upon the occurrence of the triggering event in the escrow agreement. This release commonly used to happen upon approval of the investor's I-526 petition, but since processing times are so long (14 months on average), regional centers have negotiated early release triggers so that the project can begin using the money sooner. There is a balance or tension between the investor wanting to make sure his or her petition is approved prior to the funds being released and the need of the EB-5 project to use the funds as early as possible to ensure the viability of the project. A smart investor will understand that the chances of project success are increased when funds are made available to the project as soon as possible or at least at or near the time when the funds are anticipated by the regional center. If you have questions about the escrow agreement and any early release triggers, you should consult with an experienced EB-5 immigration attorney.

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    Ian E Scott

    Immigration Attorney
    Answered on

    For EB-5 investments in regional centers, money is put in to an Escrow account subject to certain conditions being met. Once those conditions are met, the funds are released to the project. If the conditions have not been met, then the money would be returned to you. In order to file an I-526, money has to actually be transferred and the escrow account provides protection to the investor. Without it, if later conditions were not satisfied, the investor would have to sue the project who may have already spent the money. All of the $500,000 must be transferred to an escrow agent or project before the I-526 is filed.

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    Lynne Feldman

    Immigration Attorney
    Answered on

    The escrow agreement protects you in most cases and is your written proof that you can get your money back if your I-526 is not approved. They are all different though so it is important to read carefully or have your attorney read carefully and explain to you.

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