c. What is Required to Establish an Escrow?

To establish an escrow, the following must apply:

·   Construction of the dwelling must be complete and the house must be suitable for immediate occupancy

·   postponement of the improvements must be beyond the control of the builder/seller

·   the duration of the postponement must not be unreasonable (usually 90 to 120 days)

·   the amount escrowed must be at least 1 1/2 times an estimate of the amount needed to complete the work, and

·   when proposed improvements, such as street surfacing, etc., extend beyond the bounds of the veteran’s property, at least 1 1/2 times the estimated costs of completing all the work, not just that pertaining to the veteran’s property, must be escrowed.

d. When is an Escrow not required?

Lender’s are not required to escrow funds when

·   the incomplete work is limited to the installation of landscaping features (lawns, shrubbery, etc.)

·   the estimate of the cost to complete the work is not greater than $500, and

·   there is adequate assurance that the work will be completed timely and satisfactorily (usually 90 to 120 days).