An Escrow Account is a temporary account where a third party holds funds or assets on behalf of two parties until specific conditions of a transaction are fulfilled.
An Escrow Account is used to ensure secure and trust-based transactions between buyers and sellers. A neutral third party (called an escrow agent) holds the money or assets and releases them only when all agreed conditions are met.
Escrow accounts are commonly used in:
Key benefits of escrow accounts include:
For example, in a property deal, the buyer deposits money into an escrow account. The seller receives payment only after transferring ownership and completing legal formalities.
Escrow accounts help build trust and ensure smooth execution of high-value or sensitive transactions.
"A buyer deposits ₹10 lakh into an escrow account for a property purchase. The amount is released to the seller only after the property registration is completed."