Legal Definitions - conventional sequestration

Conventional sequestration refers to the act of placing property or funds into the custody of a neutral third party by mutual agreement of the parties involved in a dispute. The primary purpose is to preserve the property or funds and prevent either party from disposing of, damaging, or misusing them until the dispute is resolved. Unlike judicial sequestration, which is ordered by a court, conventional sequestration arises from a voluntary contract or understanding between the parties themselves.

Here are some examples to illustrate conventional sequestration:

• Business Partnership Dissolution: Two business partners are dissolving their company and disagree on the final valuation and distribution of a significant portion of the company's liquid assets. To ensure neither partner prematurely accesses or spends the disputed funds, they mutually agree to place a specific amount into a dedicated escrow account managed by a neutral third-party accountant. This accountant acts as the sequestrator, holding the funds securely until the partners reach a final settlement or a court issues a ruling on the distribution.

  This illustrates conventional sequestration because the funds are set aside by agreement (conventional) into the care of a neutral party to prevent their dissipation during a dispute.

• Real Estate Transaction Dispute: A buyer and seller of a commercial property have a disagreement over the condition of the building's HVAC system just before closing. The buyer claims the system is faulty and requires significant repairs, while the seller insists it's in good working order. To allow the sale to proceed without delay while they resolve the HVAC issue, they agree to place a portion of the sale price into a lawyer's trust account. This money will be held until an independent inspection determines the system's condition and the cost of any necessary repairs, at which point the funds will be released accordingly.

  This demonstrates conventional sequestration as a specific amount of money is voluntarily set aside and held by a neutral third party (the lawyer) to cover a potential liability arising from a dispute, ensuring the main transaction can proceed.

• Dispute Over Valuable Collectibles: Siblings are in a dispute over the rightful ownership of a rare and valuable stamp collection inherited from their parents. To prevent any one sibling from selling, damaging, or hiding the collection while they negotiate or seek legal advice, they all agree to have the collection stored in a secure, independent vault managed by a professional appraisal firm. The firm holds the collection as a neutral custodian until the siblings reach a resolution regarding its ownership.

  This example shows conventional sequestration where a tangible asset (the stamp collection) is placed into the custody of a neutral third party by mutual consent to preserve its integrity and prevent unilateral action by any disputing party.