An escrow is a financial arrangement in which a third party holds and regulates payment of the funds required for two parties involved in a transaction. The third party, known as an escrow agent, holds the funds or assets in a designated account until the transaction is completed, at which point the funds are released to the appropriate party.
Escrow can be used in a variety of transactions, including real estate transactions, mergers and acquisitions, and online transactions. It is designed to provide a level of security and assurance for both the buyer and seller involved in the transaction, as it ensures that neither party can abscond with the funds before the transaction is completed.
In addition to holding funds, an escrow agent may also be responsible for verifying that certain conditions have been met before releasing the funds, such as verifying the completion of services or delivery of goods. Escrow services typically come with a fee, which is paid by one or both of the parties involved in the transaction.