Planning & Development Escrow

Planning & Development Escrow is an arrangement used to hold funds securely to support planning obligations or development conditions.

Instead of providing a bond or guarantee, the developer pays an agreed sum into an independent escrow account. The funds are held there and released only when the agreed planning or development conditions are met.

This type of escrow is commonly used for private developments where financial obligations arise over time, rather than being paid upfront.

Planning & Development Escrow is suitable for developers, landowners and property investors who are subject to planning conditions or obligations.

It is also relevant for local authorities, landowners, funders and advisors who require comfort that funds will be available to meet agreed obligations.

Escrow is often used where parties want a clear, neutral alternative to bonds, guarantees or informal retention of funds.

Planning & Development Escrow is typically used when planning permission has been granted but certain financial obligations are deferred or conditional.

Common examples include Section 106–style obligations, staged infrastructure contributions, remediation works or payments linked to completion or occupation milestones.

Escrow may also be used where obligations are contingent on future events, such as completion of works or compliance with specific planning conditions.

Planning and development obligations often arise over time rather than at the start of a project. This can create uncertainty for landowners, local authorities and funders.

Local authorities may want assurance that funds will be available to deliver infrastructure, remediation or community obligations. Developers may want to avoid tying up capital unnecessarily or providing costly bonds or guarantees.

Planning & Development Escrow addresses these challenges by setting aside funds in advance, without requiring immediate payment or third-party guarantees. The funds are ring-fenced and held independently until the agreed conditions are met.

What are the primary benefits of Planning & Development Escrow?

The primary benefit of Planning & Development Escrow is certainty. Funds are secured for a specific purpose and cannot be used for anything else.

Unlike a bond or guarantee, escrow involves real funds being set aside. This provides comfort to the receiving party while remaining transparent and straightforward for the developer.

Escrow also offers flexibility. Funds can be released in stages as obligations are met, rather than all at once.

Benefits for developers and landowners

For developers and landowners, Planning & Development Escrow provides an alternative to bonds, guarantees or open-ended undertakings.

Escrow can reduce costs associated with bond premiums and avoid reliance on third-party guarantors. It also allows developers to demonstrate compliance with planning obligations without paying funds away prematurely.

Where obligations are staged or conditional, escrow can be structured so that funds are released only when the relevant milestone is reached.

Benefits for local authorities and counterparties

For local authorities and other counterparties, escrow provides reassurance that funds are genuinely available to meet planning obligations.

Funds held in escrow are ring-fenced and protected. They are not dependent on the future financial position of the developer at the time the obligation falls due.

This can support smoother delivery of infrastructure, remediation works or community contributions linked to Section 106–style agreements.

Planning & Development Escrow can be structured in different ways, depending on the nature of the planning obligation. There is no single standard model.

Escrow is commonly used to hold funds for Section 106–style obligations, deferred infrastructure contributions, remediation costs or payments linked to occupation or completion milestones.

In some cases, a single sum is paid into escrow at the outset. In others, contributions are made over time as development progresses.

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Yes. Planning & Development Escrow arrangements are often tailored to reflect the development programme and the specific planning conditions involved.

Funds may be released in stages as works are completed or milestones are reached. Separate escrow accounts may be used for different obligations, or a single account may cover multiple conditions with clear release rules.

Escrow can also be combined with other security arrangements where appropriate, although it is often used as a direct alternative to bonds or guarantees.

All escrow arrangements are administered through the dospay digital escrow portal.

The portal provides a single place where authorised parties can view account balances, payment history and escrow status. It also supports the submission and tracking of information required for payments or releases, in line with the escrow agreement.

Using a digital portal reduces reliance on email chains and manual reconciliation. It improves transparency and creates a clear audit trail for payments and releases. Advisors often find this helpful when reviewing payment history or responding to queries during the life of the project.

Planning & Development Escrow works by holding funds independently while planning or development obligations are carried out over time.

Instead of providing a bond or guarantee, the developer pays an agreed sum into an escrow account. The funds remain there and are reserved for the specific obligations set out in the planning documentation.

This ensures that money is available when obligations fall due, without requiring immediate payment or third-party security.

Planning permissions, Section 106 agreements and other development documents continue to govern the obligations themselves. They define what must be done and when.

The escrow agreement sits alongside those documents. It deals only with how funds are held and when they may be released. Release conditions usually mirror planning milestones, such as completion of works, occupation thresholds or confirmation by the local authority.

The escrow agent does not assess planning compliance or interpret conditions. It releases funds only when the agreed evidence is provided.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed at the outset and documented clearly.

Instructions are usually tied to specific events, such as the issue of a certificate, confirmation of a milestone or the occurrence of a payment default. The escrow agent checks that the instruction matches the agreed conditions before acting.

This approach ensures that payments are controlled, predictable and not dependent on informal requests or unilateral decisions by one party.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed and documented at the outset.

Instructions are usually linked to clear events, such as written confirmation from the local authority, certification of works or agreement between the parties that a condition has been satisfied.

The escrow agent checks that the instruction matches the agreed conditions before acting. Informal or unilateral requests are not accepted.

Below is a practical view of the steps that parties typically follow when using Planning & Development Escrow.

1. ‍Pay funds into escrow
   The developer pays the agreed sum into the escrow account once planning permission or an agreement is in place.‍
2. Funds held while development progresses
   The funds remain held while works are carried out or planning conditions are addressed.‍
3. Provide evidence that conditions are met
   When a condition or milestone is satisfied, the required confirmation or certification is provided.‍
4. Release funds in line with the agreed conditions
   Funds are released from escrow to the relevant authority or counterparty in accordance with the escrow agreement.‍
5. Hold funds if conditions are not met
   If conditions are not satisfied, the funds remain held until the agreed process is followed.

Setting up a Planning & Development Escrow account starts with identifying the planning obligation that needs to be secured. This may be a Section 106-style payment, a deferred contribution or a cost linked to future works.

An escrow agreement is then prepared. This document sits alongside the planning permission or development agreement and sets out how the funds will be held and when they may be released.

At the same time, we begin the account opening and onboarding process so the account is ready to receive funds once the obligation arises.

The time needed to open a Planning & Development Escrow account depends on the parties involved and the structure of the obligation.

For straightforward arrangements, account opening can usually be completed within a short period once the required information has been provided and the escrow agreement is agreed. More complex developments or ownership structures may take longer.

Most delays arise from incomplete onboarding information rather than from the escrow process itself.

To open a Planning & Development Escrow account, standard onboarding checks are required. These are similar to the checks required when opening a bank account or instructing a law firm.

This usually includes confirming the identity of authorised individuals, the ownership and control of the developer entity, and the source of the escrow funds.

We may also need basic information about the development and the relevant planning obligation so the escrow account can be set up correctly.

The following information is typically required to open a Planning & Development Escrow account:

• Details of the developer or landowner
• Identification information for authorised individuals
• Corporate documents showing ownership and control
• Source of funds information for the escrowed amount
• Summary of the relevant planning obligation or condition
• Agreed release milestones or triggers
• Expected development timetable

Providing this information clearly and early helps ensure the account can be opened without unnecessary delay.

A Planning & Development Escrow account is funded by the developer or landowner.

The amount is usually agreed as part of the planning permission, Section 106 agreement or related development documentation. Funds may be paid into escrow as a single sum or in stages, depending on how the obligation is structured.

Once paid in, the funds are ring-fenced and held only for the specific planning or development purpose they are intended to secure.

Payments from a Planning & Development Escrow account are made only when the agreed release conditions are met.

These conditions are set out in the escrow agreement and usually mirror planning milestones or confirmations, such as completion of works, occupation thresholds or written confirmation from the local authority.

When a release request is made, we check that the agreed conditions have been satisfied before releasing funds in line with the escrow agreement.

If instructions are disputed or unclear, we will not release the funds.

Instead, the funds remain held safely in the escrow account while the parties follow the process set out in the escrow agreement. This may involve clarification, confirmation from an agreed third party, or the use of the dispute resolution process under the underlying contract.

This approach protects both parties. It ensures that money is not released prematurely and that funds remain available once the position is resolved.

If a party to the underyling contract becomes insolvent, we continue to operate under the escrow agreement.

Because the funds are held in escrow and not in the control of either party, they are protected from being used for other purposes. We will follow the agreed instructions and any applicable insolvency process, as set out in the escrow agreement.

In practice, this can provide greater certainty than relying on funds held directly by one of the parties, particularly where payment timing or entitlement is being considered as part of an insolvency situation.

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What happens if DOS & Co. becomes insolvent?

All escrow funds are segregated (kept separate from our own funds), safeguarded (protected by law from our own creditors) and kept liquid and unencumbered at the Bank of England. In the event of our insolvency, we have set aside regulatory capital that will be used by our administrators to 'unwind' our affairs - this will usually involve working with the parties to agree the identity of a new escrow agent who will 'step in' to carry out our obligations under the escrow agreement.

Funds paid into an escrow account are held separately from the money of the parties and separately from our own funds. They are not mixed with operational accounts.

All of our escrow funds are held liquid and unencumbered at the Bank of England. This means that there is no counterparty risk (the bank does not lend out funds, so a 'run on the bank' is not possible).

The escrow account is set up specifically for the purposes agreed in the escrow agreement. Funds can only be used in line with that agreement and cannot be applied for any other purpose.

This separation helps protect the funds if something goes wrong elsewhere. For example, the funds are not available to the creditors of the Employer, the Contractor, us, or the underlying bank. They remain ring-fenced for the project until they are released in accordance with the agreed conditions.

We are regulated by the Financial Conduct Authority for the provision of payment services. This means we are required to meet regulatory standards around governance, systems, controls and the handling of client funds.

Where escrow arrangements involve regulated payment activity, those activities are carried out within that regulatory framework. Other aspects of escrow are contractual in nature and governed by the escrow agreement between us and the parties.

In practical terms, this combination of regulation and contract provides structure and oversight, while still allowing escrow arrangements to be tailored to the needs of a specific matter or project.

Escrow is designed to hold, protect and release funds in line with agreed conditions. It does not decide who is right or wrong in a dispute.

We do not interpret the underlying contract, assess the quality of anything done or delivered under that underlying contract, or replace the role of a contract administrator, adjudicator or court. If there is a dispute, the funds remain held while the parties follow the agreed dispute resolution process.

The escrow arrangement also does not remove the need for a properly drafted underlying contract. It supports that contract by providing a clear and neutral payment mechanism, but it does not change the parties’ underlying rights or obligations.

Escrow pricing depends on the structure, value and duration of the escrow arrangement. There is no single fixed fee, as projects and payment flows vary.

Pricing usually reflects three main elements. First, the work involved in setting up the escrow arrangement, including compliance, onboarding and preparation of the escrow agreement. Second, the ongoing administration of the escrow account while funds are held. Third, the handling of payments or releases during the life of the project.

What pricing covers is the independent holding of funds, administration of agreed payment mechanics, record-keeping, reporting, all bank fees and support throughout the project. It does not cover legal advice, contract administration or dispute resolution, which remain the responsibility of the parties and their advisors.

If something goes wrong, the escrow arrangement provides a clear framework for dealing with it.

If there is a mistake, delay or disagreement about instructions, funds remain safely held in escrow while the issue is addressed. We follow the process set out in the escrow agreement and do not release funds unless and until the agreed conditions are met.

If a party has a concern about how the escrow account is being operated, we have a formal complaints process. This allows issues to be raised, reviewed and resolved in a structured way, with escalation routes available if needed.

We are a specialist provider focused on escrow and managed payment arrangements. Escrow is not an add-on to another service. It is a core part of what we do.

Escrow funds are held securely and separately, with infrastructure designed specifically for escrow rather than adapted from other uses. Account opening is handled efficiently, and escrow arrangements are administered through a dedicated digital escrow portal, giving authorised parties visibility and a clear audit trail.

Advisors often recommend dospay because we sit independently of the transaction, operate within a regulated framework, have a proven track record and focus on doing one thing well: Holding and administering escrow funds in a clear, neutral and predictable way.