New guarantees in the field of individual construction: the law on escrow accounts

In 2024, a law was passed that introduces an escrow account mechanism for the construction of private homes. This law will come into force on March 1, 2025 and is aimed at streamlining the process of private housing construction, as well as reducing financial risks for all market participants.

An escrow account is a specialized bank account that provides secure settlements between buyers and sellers (customers and contractors). The contractor will be able to access the funds in this account only after completion of construction work and registration of ownership of the house. At the same time, he uses his own funds or borrowed resources to complete the construction.

The introduced mechanism makes it possible to provide additional guarantees for the protection of customers' funds. The law also provides for insurance of buyers' funds in case the bank goes bankrupt. The risk compensation will be carried out by the Deposit Insurance Agency, while funds in escrow accounts are protected in the amount of up to 10 million rubles.