Set up a blocked account - at which bank?

Good evening Tox,

For almost 10 years, the topic has no longer been part of the training content for bank clerks or further qualifications. Then I dare to make a prediction: at some point, it will no longer exist.

Maybe the child then has a different name. I don’t believe it will completely disappear as long as there is the 5% security retention and surety is not an option for cost reasons.

Who is the account holder then? Who is the beneficial owner and who can access the existing assets under what conditions and when? And how is the lock contractually agreed upon?

The account holder is the builder, I haven’t asked further. If the OP requests more information from the Ing-Diba, she can post the results here

Rhenish greetings

I see it purely from a logical perspective and will leave the name aside. You can call it whatever you want... The client is the account holder, so the client is authorized to dispose of the account as long as no other rights exist, for example, an assignment or pledge.

Contract basis... no idea. I also inquired because I am really interested, as a look into the terms and conditions of Ing-Diba reveals:
"Claims of the account holder(s) from the current account contract cannot be assigned or pledged to third parties."

I will report back because I am really interested in how it is legally structured then.

But aside from that... what advantage does this account have for the craftsman? He gets the money in 5 years, whether with or without this escrow account. Only the contractor is restricted and hindered in how the money is invested until the 5 years are up. I don’t quite see the point yet.

If the craftsman wants the money now, in my eyes there is only one option: a guarantee from a bank or insurance company.

A simple "sub-account" is no more or less than a second current account, a savings account, or overnight money. Whether it is called a sub-account or has a different account number... where is the lock... I will report back.

Hello Tox,

I will report back, because I am really interested in how this is legally arranged.

Good idea!

But aside from that... what advantage does this account have for the craftsman? He will get the money in 5 years, regardless of whether with or without this escrow account. Only the contractor is hindered and restricted in the form of the deposit of the money until 5 years. I don’t quite see the point yet.

For the craftsman, hoarding the money in an account blocked for him always means a hole in his cash flow. On the other hand, with free trade assignment, it is hardly manageable otherwise if the craftsman does not want to bear additional guarantee costs and the client does not want to accept an insurance policy. So it’s a catch-22 if client and contractor cannot come to terms regarding the security retention.

If the craftsman wants the money now, in my opinion there is only one option: guarantee from a bank or insurance.

Agreed. Only - when it comes to insurance policies, very few clients want to “play along.”

Rhenish regards

A brief feedback from me: Ing-Diba wrote back on the same day, stating that a blocked account is not offered. My house bank called back the next day and recommended a savings account and a written agreement ("commitment") with the craftsman that this money will be deposited into this account and paid out to him after the deadline expires. The craftsman has no choice but to accept this. I will not pay the money out to him - without any securities for me. He is probably still entitled to the interest on the balance (with today's interest rate situation and inflation a loss-making business, but that is his decision). It could only become problematic if the craftsman goes bankrupt and the insolvency administrator claims the money and does not settle according to market interest rates. But I can live with that; the amount is not that high.

My house bank also confirmed to me that blocked accounts have not been offered for years because hardly any profits can be made from them. The only thing they have is the rental deposit blocked account, but it is exclusively for rental deposits - without exceptions.

Same tone with me at Ing-Diba, no blocked account possible. I also no longer know it from practice.

Only the reference to a "sub-account," but that is nothing other than a savings account, overnight money account, or whatever. No access rights for the employee. So nothing other than a way for the employer to park their money.

Do you know what such an insurance guarantee costs a craftsman? In my view, it can't be much different from a bank guarantee anymore.

Hello Tox,

Do you know what such an insurance guarantee costs a craftsman? In my opinion, such a big difference can no longer be compared to a bank guarantee.

It’s not much; for TEUR 2.5 about €300.00 insurance premium for a surety insurance.

Guarantees are not necessarily unusual either, but especially for small and medium-sized companies they can lead to consequences that can significantly influence the financial structure. If the guarantee volume used, for example, is partially or fully counted towards the credit line obligation (depending on the institution), this can have substantial effects on the necessary company and order financing – liquidity shortages are a common consequence. In this respect, I understand the refusal of the craft business.

Rhenish greetings