What is Escrow?

Escrow is a secure arrangement where a neutral third party temporarily holds assets, funds, or documents on behalf of two transacting parties. Upon satisfying agreed terms—like inspections, financing, or condition checks—the escrow agent releases the contents appropriately. This mechanism safeguards each side by preventing premature fund transfers or incomplete exchanges.

Key Points

Neutral Custody

The agent neither favors buyer nor seller, ensuring balanced control.

Milestone-Based

Disbursements occur only once each contingency or contract provision is met.

Risk Mitigation

Reduces fraudulent conduct or misunderstandings over partial payments.

Used in Various Deals

Common in asset acquisitions, intangible holdings, and large-scale projects.

Through escrow, participants gain assurance that mutual obligations will finalize consistently, fostering trust and smoother transitions from negotiation to completion.