Escrow Legal Meaning and Definition

Here is a simplified definition of the legal term Escrow.

Escrow (noun/verb)

  1. Escrow refers to a legal arrangement where an impartial third party, known as the escrow agent, holds onto important documents or funds during a transaction between two parties. These documents or funds are held in an escrow account until specified conditions are met (like completion of a property sale). For example, in buying a house, funds might be held in escrow until the property deed is clear.

  2. The term is also used to refer to the escrow agent themselves, though this is less formal. For instance, "we worked with an escrow to finalize the deal" refers to the person or company holding the funds or documents.

  3. Escrow can also be a verb, meaning to place something (like funds or a deed) into an escrow account. For example, "The buyer will escrow the funds until they receive the property deed."

It's crucial to remember the escrow acts as a safeguard during transactions, ensuring all parties fulfill their obligations before the transaction is completed.