What is escrow?

Escrow is a financial arrangement where two parties hire a "third party" (who is neither the buyer nor the seller) to temporarily hold money, documents or other assets for a transaction on their behalf before the transaction is completed. The third party helps to make the transaction more secure by protecting the assets of the buyer and seller until both parties meet their obligations under the contract. When you commit to buying or selling something, you agree to meet certain conditions. For example, the buyer must pay an agreed amount by a certain period of time, and the seller must deliver the assets or items being sold. The escrow duty in the transaction is to receive the assets from one party, pay the funds according to the terms of the escrow agreement, and close the escrow. Their role in the transaction secures the assets of buyers and sellers before they are transferred from one party to the other. Escrow services are useful not only for home purchases, but also for online purchases. I will add that the item being sold does not have to be a product, but it can also be a service.

Escrow is a process used when two parties are in the middle of a transaction and there is uncertainty as to whether one or the other will be able to fulfill its obligations. Among the industries that use escrow are online transactions, banking, intellectual property, real estate, mergers and acquisitions, and law, and many others.

Consider a company that sells goods internationally. This company requires assurance that they will receive payment when the goods arrive at their destination. The buyer, for his part, is only willing to pay for the goods if they arrive in good condition at their destination. The buyer may place the funds in escrow with instructions to withdraw them to the seller upon arrival of the goods in good condition. This way both parties are safe and the transaction can proceed.