escrow

n.
Money, property, a deed, or a bond put into the custody of a third party for delivery to a grantee only after the fulfillment of the conditions specified.

tr.v., -crowed, -crow·ing, -crows.
To place in escrow.

idiom:

in escrow

1. In trust as an escrow.

[Anglo-Norman escrowe, variant of Old French escroe, scroll. See scroll.]

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 Says:
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.

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1. Written Instrument, such as a deed, temporarily deposited with a neutral third party, the Escrow Agent, by the agreement of two parties to a valid contract. The escrow agent will deliver the document to the benefited party when the conditions of the contract have been met. The depositor has no control over the instrument in escrow. Escrow now applies to all instruments so deposited.

2. Money or other property so deposited is also loosely referred to as escrow. Monthly deposits by a homeowner to the mortgage holder to pay for taxes and insurance are called escrows.

An agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.
Example: The Deed to the property and the Earnest Money were both placed in escrow pending fulfillment of other conditions to the Contract.

For more information on escrow, visit Britannica.com.

A legal device used in a construction contract whereby something of value is placed with a third party, acting as a trustee, to guarantee that conditions of the contract will be met.

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This entry contains information applicable to United States law only.

Something of value, such as a deed, stock, money, or written instrument, that is put into the custody of a third person by its owner, a grantor, an obligor, or a promisor, to be retained until the occurrence of a contingency or performance of a condition.

An escrow also refers to a writing deposited with someone until the performance of an act or the occurrence of an event specified in that writing. The directions given to the person who accepts delivery of the document are called the escrow agreement and are binding between the person who promises and the person to whom the promise is made. The writing is held in escrow by a third person until the purpose of the underlying agreement is accomplished. When the condition specified in the escrow agreement is performed, the individual holding the writing gives it over to the party entitled to receive it. This is known as the second delivery.

Any written document that is executed in accordance with all requisite legal formalities may properly be deposited in escrow. Documents that can be put in escrow include a deed, a mortgage, a promise to pay money, a bond, a check, a license, a patent, or a contract for the sale of real property. The term escrow initially applied solely to the deposit of a formal instrument or document; however, it is popularly used to describe a deposit of money.

The escrow agreement is a contract. The parties to such an agreement determine when the agreement should be released prior to making the deposit. After the escrow agreement has been entered, the terms for holding and releasing the document or money cannot be altered in the absence of an agreement by all the parties.

A depositary is not a party to the escrow agreement, but rather a custodian of the deposit who has no right to alter the terms of the agreement or prevent the parties from altering them if they so agree. The only agreement that the depositary must make is to hold the deposit, subject to the terms and conditions of the agreement. Ordinarily, the depositary has no involvement with the underlying agreement; however, an interested party may, in a few states, be selected to be a depositary if all parties are in agreement. In all cases, a depositary is bound by the duty to act according to the trust placed in him or her. If the depositary makes a delivery to the wrong person or at the wrong time, he or she is liable to the depositor.

The document or the money is only in escrow upon actual delivery to the depositary. Ordinarily, courts are strict in their requirement that the terms of the agreement be completely performed before the deposit is released. A reasonable amount of time must generally be allotted for performance. Parties may, however, make the agreement that time is of the essence, and in such a case, any delay beyond the period specified in the agreement makes the individual who is obligated to act forfeit all his or her rights in the property in escrow.

(es-kroh)

The condition of being ineffective until certain conditions are met. For example, money inherited by a minor might be held in escrow until the heir reaches a certain age. Homeowners with mortgages frequently pay money for insurance and taxes on their home into an escrow account each month. The holder of the mortgage then pays the insurance and tax bills out of the escrow account when the bills are due.

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