Escrow Account

Escrow Account a contract, deed, bond, or other written agreement deposited with a third person, by whom it is to be delivered to the grantee or promisee on the fulfillment of some condition.Escrow is a legal arrangement in which an asset (such as cash, real property or other tangible assets) is deposited into safekeeping (e.g. a bank account) under the trust of a neutral third party (escrow agent) pending satisfaction of contractual contingency or condition. Once the condition has been met, the escrow agent will deliver the asset to the party prescribed by the contract.

Escrow Account is a 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. Escrow account is a special account opened with a bank or other financial institution to hold funds in trust until some condition is met by the person or company for whom the funds are designated; for example, until a service has been rendered or a legal dispute settled.

An Escrow Account is held in the borrower’s name to pay obligations such as property taxes, insurance premiums, lease payments, hazard insurance, and other associated property payments and expenses when they are due. It basically insures that these costs are paid in a timely manner.