Escrow

Loading the player...

What is 'Escrow'

An escrow is 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.

BREAKING DOWN '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. Escrow Agreement

    A legal documents that outlines the terms and conditions between ...
  2. Bulk Sales Escrow

    A type of escrow agreement placed on the sale of inventory, business ...
  3. Escrow Agent

    An entity that has fiduciary responsibilities in the transfer ...
  4. Escrowed Shares

    Shares held in an escrow account and in most cases cannot be ...
  5. In Escrow

    An item such as money or a piece of property that has been transferred ...
  6. Escrowed To Maturity

    The condition of a bond that has been repaid in advance by means ...
Related Articles
  1. Home & Auto

    What does "In Escrow" Mean?

    Escrow is a financial agreement involving two parties, usually a buyer and a seller. The buyer deposits money, securities or other funds into the escrow account, where they are held until both ...
  2. Credit & Loans

    Buying A Home: Go Through The Escrow Process

    By Amy FontinelleOnce you're in escrow, you're in the home stretch, but what a long stretch it is. The days until you get the keys to your new home can't go by quickly enough, yet ...
  3. Options & Futures

    Understanding The Escrow Process

    Learn the 10 steps that lead up to closing the deal on your new home and taking possession.
  4. Home & Auto

    12 Steps To Closing A Real Estate Deal

    Before that new house officially becomes yours, there’s a long list of things you’ll need to accomplish during the closing process.
  5. Insurance

    10 Hurdles To Closing On A New Home

    It's the biggest purchase of your life - find out what can go wrong before you even close the deal.
  6. Home & Auto

    Avoiding the 5 Most Common Rent-to-Own Mistakes

    Pitfalls that a prospective tenant-buyer could encounter on the road to purchase – and how not to stumble into them.
  7. Home & Auto

    12 Steps To Closing A Real Estate Deal

    A long list of things needs to happen before a home becomes yours. Find out what to expect.
  8. Home & Auto

    Purchasing A Short-Sale Property

    If you are looking for a good deal and have time to wait, a short-sale house may be for you.
  9. Home & Auto

    7 Must-Have Real Estate Contract Conditions

    Buying a home can bury you in paperwork. But it’s worth your time to make sure your contract contains these seven important conditions.
  10. Credit & Loans

    Buying A Home: Write An Offer

    By Amy FontinelleIf you've found that perfect home, congratulations! You've potentially reached the end of the searching process - but first you'll have to write an offer and the seller will ...
RELATED FAQS
  1. Who manages an escrow account?

    Managing an escrow account is a job for a trusted and experienced service provider. Discover the best personal finance solutions ... Read Answer >>
  2. Does the bank set up an escrow account for the buyer and seller in a home sale?

    Learn about the process of escrow and who is responsible for setting up escrow accounts for the buyer and seller in the purchase ... Read Answer >>
  3. Do mortgage escrow accounts earn interest?

    Paying down monthly mortgage escrow accounts? Will you receive any interest on this payment? If you are, should you put more ... Read Answer >>
  4. How does the bank profit off of escrow accounts?

    Discover the truth behind escrow accounts and the bank's profits. Are these accounts worthwhile or just another way for the ... Read Answer >>
  5. Do landlords set up escrow accounts for their tenants' security deposits?

    Learn when and why landlords place rental property security deposits in separate escrow accounts to make sure the money is ... Read Answer >>
  6. Do FHA loans require escrow accounts?

    Understand how FHA mortgages require escrow accounts for property taxes, homeowners insurance and mortgage insurance premiums ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center