escrow

Vocabulary Word

Definition

'Escrow' is a term usually used in real estate transactions, where a third party holds funds or assets on behalf of two parties involved in a transaction. The escrow holds these until all conditions of the transaction are satisfied.

Examples in Different Contexts

In real estate transactions, 'escrow' services are commonly used to mitigate risks between buyers and sellers. A real estate agent might explain, 'Using an escrow service ensures that the funds are released only when all contractual conditions are met by both parties.'

Practice Scenarios

Real Estate

Scenario:

We've received a potential buyer for the property, they seem quite serious. I suggest we make sure all processes are correctly followed, especially around payments.

Response:

Absolutely, the purchase funds should be held in escrow until all transaction conditions, including the house inspection, are completely met.

Business

Scenario:

The deal is quite promising, but we should consider all possible risks. Maybe an escrow arrangement could safeguard our interests?

Response:

I agree with you. Holding the sale proceeds in escrow could be a prudent measure until all post-close requirements are fulfilled.