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.


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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.

  1. In Escrow

    An item such as money or a piece of property that has been transferred ...
  2. Commingling (Commingled)

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

    Bonds that have their principle cash amount already held aside ...
  4. Escrow Agreement

    A legal documents that outlines the terms and conditions between ...
  5. Payer

    An entity that makes a payment to another. While the term payer ...
  6. Trustee

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