Escrow

AAA

DEFINITION of 'Escrow'

A financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled. Securities, funds and other assets can be held in escrow.

INVESTOPEDIA EXPLAINS 'Escrow'

An escrow account can be used in the sale of a house, for example. If there are conditions to the sale, such as the passing of an inspection, the buyer and seller may agree to use escrow. In this case, the buyer of the property will deposit the payment amount for the house in an escrow account held by a third party. This assures the seller - in the process of allowing the house to be inspected - that the buyer is capable of making payment. Once all of the conditions to the sale are satisfied, the escrow transfers the payment to the seller, and title is transferred to the buyer.

RELATED TERMS
  1. In Escrow

    An item such as money or a piece of property that has been transferred ...
  2. Escrow Agreement

    A legal documents that outlines the terms and conditions between ...
  3. Commingling (Commingled)

    1. In securities, it is the mixing of customer-owned securities ...
  4. Refunded Bond

    Bonds that have their principle cash amount already held aside ...
  5. Trustee

    A person or firm that holds or administers property or assets ...
  6. Payer

    An entity that makes a payment to another. While the term payer ...
Related Articles
  1. Insurance

    10 Hurdles To Closing On A New Home

  2. Home & Auto

    10 Tips For Getting A Fair Price On ...

  3. Home & Auto

    Should You Buy A House At Auction?

  4. Credit & Loans

    Understanding The Mortgage Payment Structure

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center