ᐅ Setting up a blocked account – which bank should I choose?

Dear all,

A contractor insists on receiving the retention amount (security deposit), but I would like to deposit it into a blocked account and only release it after 5 years. The problem is that I cannot find any bank that still offers this service. There are still rental deposit options, but nothing else. A bank guarantee is "too expensive" for the contractor. I have already considered simply opening a high-yield savings account, but the contractor considers that "too insecure."

Maybe someone can help or offer a suggestion?

Thank you very much!

Hello,

the cleanest and safest option for both parties in this case would be what is known as a "client trust account."

A client trust account is an account used for the temporary, fiduciary holding of funds belonging to third parties.

The account holder opens it:

- in their own name
- with sole authority over the account
- for someone else
- in a fiduciary capacity

However, only notaries, lawyers, tax advisors, and some certified public accountants can open such an account.

Another, much simpler option would be for you and the contractor to open a joint account with both of you having exclusive joint signing authority.

Issues with this approach:

- No exemption certificate (tax allowance) possible
- Disbursements only possible jointly

Personally, I would recommend a client trust account.

Regards,

Dirk

It was only agreed to withhold 5% of the gross amount as a security deposit, with the option to replace it by a guarantee (which he refuses for cost reasons). The conditions of VOB Parts B and C applied.
So far, the contractor has not set any deadlines. However, I wonder to what extent this regulation under VOB regarding the "blocked account" carries any binding force if this type of account is no longer offered by banks!?! I can hardly just conjure it up.

I am really at a loss now. The contractor is not from the local area. Is the last option now to open a joint account either at his or my place of residence?

Hello,

Bauabenteurer schrieb:

I am wondering, however, to what extent this regulation according to VOB regarding the "blocked account" is binding if this type of account is no longer offered by financial institutions!?! I can hardly just create one out of thin air

If I'm not completely mistaken, Ing-Diba still offers this in my opinion. Otherwise, just ask your lender; they will definitely know how and with which institution it is possible to set up a blocked account. It shouldn’t be much more effort for the respective institution than setting up a blocked account for an international student.

Regards, Bauexperte

No bank would do something like that anymore, if only because of the effort involved and the current laws such as the Tax Code, Money Laundering Act, and similar regulations. And certainly not Ing-Diba. With them, you can’t even pledge or assign your credit balance. They reject such an agreement.

If the contract stipulates a 5% retention or a guarantee, then that is how it is.

Hello Tox,

toxicmolotow schrieb:
No bank does that anymore, mainly due to the effort involved and current laws like the tax code, the Money Laundering Act, and similar regulations. And ING-DiBa definitely does not. With them, you cannot even pledge or assign credit balances. They reject such agreements.

I recently spoke with our financer and brought up the question of having a blocked account yes/no during the call; so I was not off track.

ING-DiBa sets up a (visible) sub-account, issues the guarantee based on it, and collects the 5% amounts on this blocked account. I did not inquire with other institutions; my financer mentioned that the approach varies. In other words, other institutions also offer this service—of course, for a fee.

Regards, Bauexperte