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Related to Escrow: Escrow account, Escrow payment
When someone else holds assets of yours until the terms of a contract or an agreement are fulfilled, your assets are said to be held in escrow. The assets could be money, securities, real estate, or a deed.
The person or organization that holds the assets is the escrow agent, and the account in which they are held is an escrow account.
For example, if you make a down payment on a home, the money is held in escrow until the sale is completed or the deal falls through.
Amounts you prepay to cover property taxes and insurance premiums as part of your regular mortgage payment are also held in escrow until those bills come due and are paid. In that case, you may earn interest on the amount in the escrow account.
The process in which money and/or documents are held in trust by a disinterested third party who will consummate the instructions of the parties as expressed in their contracts.The third party is called the escrow agent.The escrow agreement usually contains a clause providing that if the parties disagree about something and are unable to resolve their differences, the escrow company will pay all money on hand into court in an action called an interpleader,name the disputing parties as defendants,disclaim any interest of its own in the property except for reimbursement for costs and expenses of bringing the interpleader action, and then let the parties battle it out in court. This effectively takes the escrow company out of the middle of any disputes and avoids liability on its part.