You have just signed the preliminary sales agreement. The excitement of finding the property fades, and administrative reality takes over. The notaire asks you to pay the escrow deposit, between 5 and 10% of the purchase price. On a Parisian apartment at 600,000 euros, that represents 30,000 to 60,000 euros. This is not an insignificant sum, yet most buyers transfer it without truly understanding what it represents, where it goes, and under what conditions they can recover it.
This lack of clarity is not acceptable when the amounts involved reach several tens of thousands of euros. After fifteen years of property hunting in Paris and over 1,200 transactions at Home Select, I have seen buyers panic upon discovering that their escrow was blocked for months after a sale cancellation, and others skillfully negotiate the amount to preserve their cash flow. This guide clarifies every aspect of the escrow so that you know exactly what you are doing when you initiate that transfer.
Escrow, security deposit, immobilization indemnity: untangling the terms
French property legal vocabulary thrives on confusion. Three terms circulate for closely related but distinct realities, and even professionals sometimes use them interchangeably.
The security deposit (depot de garantie) is the sum paid by the buyer at the time of signing the preliminary sales agreement (or the unilateral promise of sale) to materialize their commitment. It is the financial proof that the buyer is serious.
The escrow (sequestre) is the act of entrusting this sum to a neutral third party. The word designates both the operation and the third party who holds the funds. In Parisian practice, this third party is almost always the notaire. The money is deposited in a specific account (the notaire’s consignment account at the Caisse des Depots et Consignations) and can only be released with the agreement of both parties or by court order.
The immobilization indemnity (indemnite d’immobilisation) is a term specific to the unilateral promise of sale (distinct from the bilateral preliminary agreement). In a unilateral promise, only the seller commits to selling during a given period. The buyer pays an immobilization indemnity (generally 10% of the price) in exchange for this exclusivity. If the buyer decides not to buy (outside of a condition precedent), the indemnity remains with the seller.
In common Parisian practice, the majority of transactions use the bilateral preliminary agreement (mutual commitment), and the terms “escrow” and “security deposit” are used interchangeably. The essential point: it is your money, held by the notaire, which will be applied toward the sale price on the day of signing the deed of sale.
The amount: between convention and negotiation
No law sets the escrow amount. It is an agreement between the parties. In practice in Paris, customs vary between 5 and 10% of the sale price.
The most common standard is 10%. This is the percentage that most estate agents and notaires propose by default. For an apartment at 700,000 euros, that represents 70,000 euros, a considerable sum that will be immobilized for a minimum of three months, the time between the preliminary agreement and the deed of sale.
But 5% is perfectly acceptable and increasingly common, especially when the buyer is financing a large portion of the purchase by mortgage. In this case, mobilizing 10% of the price in immediate cash can be constraining, even incompatible with the financial structure (the personal contribution must also cover notaire fees and potential renovation work).
Particular cases our property hunters encounter frequently. Purchases above one million euros: the 10% escrow represents 100,000 euros or more. Negotiating 5% or even a fixed amount (50,000 euros for example) becomes a real issue. Expatriate buyers: the international transfer can take several days and transfer limits are sometimes restricted, so a reasonable escrow amount avoids banking complications. First-time buyers with a tight deposit: every euro counts, and a reduced escrow preserves room for ancillary costs.
A point that few agents mention: the escrow is not lost. It is applied toward the sale price on the day of the final signing. If you pay 50,000 euros as escrow on a 600,000 euro purchase, the balance due on the day of the deed of sale is 550,000 euros (plus notaire fees). Your bank will release the loan taking the escrow already paid into account.
Every clause in the preliminary agreement is negotiable. Our property hunters optimize the financial conditions of your purchase, from the escrow amount to the financing timelines. Entrust us with your project
The payment timeline
The escrow payment chronology follows a precise schedule that you should know to avoid misunderstandings.
Day 0: signing of the preliminary sales agreement at the notaire’s office (or at the agency, then sent to the notaire for registration). The agreement specifies the escrow amount and payment deadline.
Day 1 to Day 10: the buyer’s cooling-off period. During these ten calendar days (starting the day after receiving the agreement by registered mail or electronic delivery), the buyer can cancel the purchase without justification and without penalty. This is an absolute right, a matter of public policy.
The escrow payment generally occurs after the cooling-off period, meaning from Day 11 onwards. The agreement specifies a payment deadline, often “within 10 business days following expiry of the cooling-off period” or “within 15 days of signing.” In practice, the buyer makes a transfer to the notaire’s escrow account within this period.
A practical tip: do not wait until the last day to make the transfer. Transfers of significant amounts (above 10,000 euros) are subject to bank checks (anti-money laundering). It is not unusual for a 50,000 euro transfer to be held for 24 to 48 hours by the bank’s compliance department. Allow three business days of margin.
What happens if the escrow is not paid on time? The seller can send the buyer a formal notice to pay. If the buyer does not comply, the seller can consider the agreement void due to the buyer’s fault and claim damages. In practice, a delay of a few days is tolerated if the buyer communicates and justifies the delay (banking issue, international transfer time). But a complete non-payment is a warning sign that jeopardizes the sale.
Where is the escrow held?
The question seems trivial. It is not.
The escrow can be held by the notaire or by the estate agent who handled the sale. Both are authorized to receive and hold funds on behalf of the parties.
At the notaire: this is the most secure option. The notaire is a public officer, subject to strict rules governing third-party funds. Escrowed sums are deposited at the Caisse des Depots et Consignations, separate from the notaire’s personal assets. In the event of the notaire’s failure (extremely rare), the profession’s collective guarantee covers client funds.
At the estate agent: this is legally possible and common when the agreement is signed at the agency. The agent has a dedicated escrow account, guaranteed by a financial institution. The security is real, but the profession has seen some cases of misappropriation of escrowed funds, exceptional situations that justify a preference for deposit at the notaire’s office.
Our property hunters’ recommendation: systematically request that the escrow be paid directly to the notaire, even if the agreement is signed at an agency. This is a legitimate request and rarely refused. The notaire is the trusted third party par excellence in French property transactions.
When do you recover the escrow?
Three scenarios determine the fate of the escrow.
Scenario 1: the sale completes. The escrow is applied toward the sale price on the day of signing the deed of sale. You do not “recover” the escrow: it forms part of the price you pay. This is the normal and most frequent case.
Scenario 2: the sale is cancelled for a legitimate reason. Withdrawal within the 10-day period. Non-fulfilment of a condition precedent (loan refused, pre-emption by the city council). In these cases, the escrow is fully returned to the buyer. The notaire processes the refund within 21 days in principle, but in practice, follow-up is often needed.
A frequent point of friction: when the mortgage condition precedent is not fulfilled, the seller may challenge the buyer’s good faith and refuse to release the escrow. The notaire then finds themselves in a delicate position: they hold the funds but cannot release them without both parties’ agreement or a court order. The escrow remains blocked for the duration of the dispute resolution, sometimes several months. This is exactly why the precise drafting of the condition precedent is so important.
Scenario 3: the buyer withdraws without legitimate reason. The buyer changes their mind after the cooling-off period, without being able to invoke a condition precedent. The seller has the right to claim the escrow as fixed compensation (if the agreement provides for it) or to pursue the buyer for forced completion of the sale. Most agreements include a penalty clause setting the indemnity at 10% of the price, exactly the amount of the escrow. In practice, the seller retains the escrow and the transaction is cancelled.
At Home Select, our property hunters ensure that the preliminary agreement provides clear terms for the return of the escrow in the event of non-fulfilment of conditions precedent. The standard wording, “the escrow shall be returned to the buyer within 21 days of notification of non-fulfilment of the condition precedent,” must appear in black and white.
The escrow and financing: impact on your plan
The escrow has a direct impact on your financing plan, and many buyers do not anticipate it correctly.
Your personal contribution must cover several items: the escrow (5-10% of the price), notaire fees (7-8% for existing properties), and any planned renovation work. If your total contribution is 120,000 euros for a 600,000 euro purchase, the calculation is tight: 60,000 euros escrow (10%) + 45,000 euros notaire fees + 15,000 euros renovation = 120,000 euros. Nothing remains for contingencies.
By negotiating a 5% escrow (30,000 euros instead of 60,000 euros), you retain 30,000 euros of available cash during the three months between the preliminary agreement and the deed of sale. Those three months are also the time during which you finalize your mortgage, terminate your current lease, and prepare your move. Having available cash during this period is not a luxury: it is prudent.
Another technical point: the escrow is paid before the loan is released. It is money you draw from your personal savings, not from the mortgage. The bank accounts for this in the structure: if you borrow 480,000 euros and pay 60,000 euros escrow plus 45,000 euros notaire fees, your effective contribution is 105,000 euros, or 17.5% of the price. Some banks calculate your contribution ratio including the escrow, others do not. Ask your broker to clarify this point.
Pitfalls to avoid
The escrow is a seemingly simple operation, but several pitfalls are worth noting.
Transferring to the wrong account. Make sure you transfer the escrow to the notaire’s escrow account and not to a personal account or the agency’s current account. The bank details (RIB) must come directly from the notaire’s office. Fraud attempts using fake bank details exist. Always verify the details by phone with the notaire before transferring significant sums.
Paying the escrow before the cooling-off period. If you pay the escrow before the cooling-off period expires and then withdraw, you will recover your money, but the refund can take several weeks. Wait until the end of the cooling-off period before transferring, unless the agreement requires immediate payment (which is rare and arguable).
Escrow blocked in case of dispute. If the seller contests the return of the escrow (for example by challenging the buyer’s good faith in their mortgage efforts), the notaire cannot release the funds unilaterally. The escrow remains blocked until an amicable agreement or court decision. This blockage can last six months to a year. This is an additional reason to carefully draft the preliminary agreement and preserve all evidence of your banking efforts.
Banker’s cheque refused. More and more Parisian notaires refuse banker’s cheques for the escrow and require a bank transfer. This is more secure and faster. Do not show up to sign the preliminary agreement with a cheque without having verified the accepted payment methods with the notaire.
From the escrow to the key handover, every financial step matters. Our property hunters coordinate the entire process so that you buy with complete peace of mind. Get a free callback
What the property hunter negotiates for you
The amount and conditions of the escrow are among the parameters that our property hunters negotiate within the overall framework of the preliminary agreement. This is never an isolated issue: it forms part of a negotiation strategy covering the price, conditions precedent, timelines, and financial terms.
A concrete example. A couple was looking for an apartment in the 16th arrondissement, total budget of 900,000 euros. Their contribution was 180,000 euros, entirely needed to cover notaire fees (approximately 67,000 euros), the escrow, and planned renovation work (25,000 euros). The estate agent requested a 10% escrow, or 90,000 euros. The calculation did not work: 90,000 + 67,000 + 25,000 = 182,000 euros, leaving no margin.
Our property hunter negotiated a 5% escrow (45,000 euros), arguing the strength of the financing application (permanent senior executive contract, 28% debt-to-income ratio, bank agreement in principle already obtained). The seller accepted. Result: the couple retained 43,000 euros of available cash during the three months of the preliminary-to-deed period, which allowed them to order renovation work in advance and move in faster after signing.
This type of negotiation is invisible to most buyers who have never purchased before and do not know that the escrow amount is negotiable. Yet it is a simple lever that costs the seller nothing (they will receive the full price on signing day) and can considerably facilitate the buyer’s financial structure.
The expertise of our 16 property hunters across more than 1,200 transactions has taught us that the best deals are not built on price alone. The escrow, timelines, conditions precedent, signing date: every parameter of the preliminary agreement is a lever. And it is their optimal combination that makes the difference between a purchase endured and a purchase mastered.
Frequently asked questions
What is the difference between the escrow and the security deposit?
The security deposit is the sum paid by the buyer to prove their commitment. The escrow (sequestre) is the act of entrusting this sum to a trusted third party (the notaire, sometimes the estate agent). In practice, the two terms often refer to the same operation, but escrow implies that the money is held by a neutral third party.
Can the escrow amount be negotiated?
Yes. The amount is not set by law. It results from an agreement between seller and buyer. A property hunter can negotiate a 5% escrow instead of 10%, especially when the buyer has a limited deposit or when the financing requires preserving cash reserves.
When is the escrow paid?
The escrow is paid in the days following the signing of the preliminary agreement, generally within 5 to 10 business days. The transfer is made directly to the notaire's escrow account. Note: the 10-day cooling-off period runs independently of the escrow payment.
What happens to the escrow if the sale falls through?
If the sale is cancelled for a legitimate reason (unfulfilled condition precedent, withdrawal within the 10-day period), the escrow is fully returned to the buyer. If the buyer withdraws without valid reason after the cooling-off period, the seller can claim the escrow as compensation.
Does the escrow earn interest?
In theory, the notaire can place the escrow in an interest-bearing account (Caisse des Depots). In practice, rates are very low and most notaires keep the funds in a non-interest-bearing account. On a 50,000 euro escrow held for three months, any interest earned is negligible.
