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 Paris apartment at 600,000 euros, that is 30,000 to 60,000 euros. It is no small sum, yet most buyers transfer it without really understanding what it is, where it goes, and on what terms they can recover it.
That lack of clarity is not acceptable when the sums involved run to 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 on discovering that their escrow was blocked for months after a sale fell through, and others negotiate the amount skilfully to preserve their cash flow. This guide clarifies every aspect of the escrow so you know exactly what you are doing when you set up that transfer.
Escrow, security deposit, immobilization indemnity: untangling the terms
French property law thrives on confusion. Three terms circulate for closely related but distinct things, and even professionals sometimes use them interchangeably.
The security deposit (dépôt de garantie) is the sum paid by the buyer on signing the preliminary sales agreement (or the unilateral promise of sale) to give substance to their commitment. It is the financial proof that the buyer is serious.
The escrow (séquestre) is the act of entrusting this sum to a neutral third party. The word covers both the operation and the third party who holds the funds. In Paris practice, this third party is almost always the notaire. The money is placed in a specific account (the notaire’s consignment account at the Caisse des Dépôts et Consignations) and can be released only with the agreement of both parties or by court order.
The immobilization indemnity (indemnité 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 for 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 a condition precedent), the indemnity stays with the seller.
In common Paris practice, most transactions use the bilateral preliminary agreement (a mutual commitment), and the terms “escrow” and “security deposit” are used interchangeably. The essential point: it is your money, held by the notaire, that will be applied towards the sale price on the day the deed of sale is signed.
The amount: between convention and negotiation
No law sets the escrow amount. It is an agreement between the parties. In practice in Paris, custom varies between 5 and 10% of the sale price.
The most common standard is 10%. This is the percentage most estate agents and notaires propose by default. For an apartment at 700,000 euros, that is 70,000 euros, a considerable sum tied up for at least 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 part of the purchase by mortgage. In that case, finding 10% of the price in immediate cash can be a stretch, even incompatible with the financial structure (the personal contribution must also cover notaire fees and any renovation work).
Some cases our property hunters meet often. Purchases above one million euros: the 10% escrow is 100,000 euros or more, so negotiating 5% or even a fixed amount (50,000 euros, say) 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 few agents mention: the escrow is not lost. It is applied towards the sale price on the day of 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 releases the loan taking the escrow already paid into account.
Every clause in the preliminary agreement is negotiable. Our property hunters optimise 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 treat the agreement as void through the buyer’s fault and claim damages. In practice, a delay of a few days is tolerated if the buyer is in contact and explains it (a banking issue, an international transfer time). But complete non-payment is a warning sign that jeopardises 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 authorised 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 on third-party funds. Escrowed sums are placed at the Caisse des Dépôts 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 the occasional case of misappropriated escrow funds, exceptional situations that justify a preference for the notaire’s office.
Our property hunters’ recommendation: always ask for the escrow to 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 towards 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, chasing 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 is then in a delicate position: they hold the funds but cannot release them without both parties’ agreement or a court order. The escrow stays blocked for as long as the dispute lasts, sometimes several months. This is exactly why precise drafting of the condition precedent matters so much.
Scenario 3: the buyer withdraws without legitimate reason. The buyer changes their mind after the cooling-off period, with no condition precedent to invoke. 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 keeps the escrow and the transaction is cancelled.
At Home Select, our property hunters make sure the preliminary agreement sets clear terms for the return of the escrow if conditions precedent are not fulfilled. 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 maths is tight: 60,000 euros escrow (10%) + 45,000 euros notaire fees + 15,000 euros renovation = 120,000 euros. Nothing is left for contingencies.
By negotiating a 5% escrow (30,000 euros instead of 60,000 euros), you keep 30,000 euros of available cash during the three months between the preliminary agreement and the deed of sale. Those three months are also when you finalise your mortgage, give notice on your current lease and prepare your move. Having cash to hand in 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 takes this into account: 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 a 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 alone. The escrow stays blocked until an amicable agreement or a court decision. This can last six months to a year. One more reason to draft the preliminary agreement carefully and keep all evidence of your banking efforts.
Banker’s cheque refused. More and more Paris notaires refuse banker’s cheques for the escrow and require a bank transfer. This is more secure and faster. Do not turn up to sign the preliminary agreement with a cheque without first checking 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 terms of the escrow are among the parameters our property hunters negotiate within the wider framework of the preliminary agreement. It is never an isolated issue: it is part of a negotiating strategy covering the price, the conditions precedent, the timelines and the financial terms.
An example. A couple was looking for an apartment in the 16th arrondissement, total budget of 900,000 euros. Their contribution was 180,000 euros, all of it needed for notaire fees (around 67,000 euros), the escrow, and planned renovation work (25,000 euros). The estate agent asked for a 10% escrow, or 90,000 euros. The maths 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), pointing to the strength of the financing application (a permanent senior executive contract, a 28% debt-to-income ratio, a bank agreement in principle already obtained). The seller agreed. The result: the couple kept 43,000 euros of available cash through the three months between agreement and deed, which let them order the renovation work in advance and move in sooner after signing.
This kind of negotiation is invisible to most first-time buyers, who do not know the escrow amount is negotiable. Yet it is a simple lever that costs the seller nothing (they receive the full price on signing day) and can greatly ease the buyer’s financial structure.
The experience 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, the timelines, the conditions precedent, the signing date: every parameter of the preliminary agreement is a lever. And it is the right combination of them that separates a purchase endured from 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.
