40.30.13 Deposits with Escrow Agents and Trustees (1000030)
Escrow refers to money held in an account by a third party while the college and another entity complete a transaction. Often, a contract outlines the conditions that must be met in order for the money to transfer from one party to the other. Other times, one of the parties may provide consent or a set of instructions for transferring the money or assets.
In the college system, the most common use of escrow is for retainage in construction projects.
Retainage is the holding back of a certain amount of money paid to contractors and subcontractors to ensure a project is completed and done well. This withholding typically ranges from 5% to 10% of the full project cost. It is normally withheld on each invoice from the contractor.
Account 1000030 should only be used when escrow or retainage funds are deposited with an external agency or financial institution. If a contractor elects to allow the college to retain funds, then the funds should remain in account 1000070 (Cash in Bank).
See CLAM 40.xx.xx for guidance on accounting for escrows and retainage.
Last Modified: 3/16/23, 4:36 PM