What is an ESCROW account
An Escrow account is an account that is set up in order to provide safety and protection of assets during the transfer of funds. An Escrow account is important as it ensures the safety of funds or property and makes sure that they will not change hands under any circumstances, until all requirements of the account have been fulfilled.
To learn more about Escrow accounts, please visit DeltaQuest’s Escrow Accounts service page.
ESCROW account explained
An Escrow account is established to ensure protection of investment during the transfer procedure, such as money, documents or property. They are usually used for businesses engaged in international commerce and involve the arrangement of a purchaser, and supplier and a third party. The purchaser and supplier establish the transaction, whilst the third party is also known as the ‘escrow agent’ or ‘escrow manager’ and is the holder of the Escrow account.
The purpose of an Escrow account is to ensure that the goods are not transferred to the purchaser until the necessary funds are in the supplier’s account. The third party is in control of the funds/goods and the Escrow acts as a form of protection for both the buyer and the seller. This is because the seller is assured that the funds are available, but the funds are not released until the purchaser gives the order to do so, ensuring that they have time to receive and check the goods before the funds are released.
For any transaction that involves a substantial investment, it is important to create an Escrow. This relates to most contracts that involve the transfer, lease or financing of property, when making trade deals, selling a business or transferring stock.
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