Purpose
The primary purpose of a paymaster is to receive fees in escrow by buyers in a large transaction, and disburse to the sellers and brokers on the transaction.
Paymasters often are, but are not required to be, a lawyer (also known as a 'lawyer paymaster'). When dealing with commission payments on contracts dealing with large amounts of money (such as Oil, Gas, Steel, Iron, Gold, MTN's, VG's, T-Strips, and other instruments), most banks in the United States are very wary of handling such large amounts of money. In addition, most buyers and sellers of such transactions want to place the money with a neutral third party for disbursement. In most cases, the buyer and the seller involved in the transaction require a paymaster be named to handle all incoming and outgoing funds.
A paymaster is a neutral third party and has no knowledge of any particulars of the transaction. He handles the incoming commissions, and then disburses the funds accordingly. In return for his services the paymaster charges a small fee, which is paid directly to him out of the commission proceeds prior to disbursement.
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