Define: Escrow Account

Business, Legal & Accounting Glossary

Definition: Escrow Account



What is the dictionary definition of Escrow Account?

Dictionary Definition


  • Banking: Account to which an account holder makes monthly or other periodic deposits, and authorises the bank to withdraw funds to pay for certain fixed obligations such as taxes, rent or insurance premiums.
  • Accounting: Account in which funds are accumulated for specific disbursements.

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Full Definition of Escrow Account


An escrow account is an account designated to hold escrow funds. The escrow accounts purpose is to keep funds held under an escrow agreement segregated from any other account of the escrow agent. The escrow agent has a fiduciary responsibility to disburse the funds in the escrow account according to the agreement. An escrow account is often used in real estate transactions. The buyer’s contract deposit is held in the escrow account until closing. For example, in New York City, the seller’s attorney usually handles the escrow account. That fiduciary duty to handle the escrow account legally supersedes the attorney’s loyalty to the seller. Thus, the seller’s attorney cannot release the buyer’s funds from the escrow account to the seller before the closing. If the deal fails to close, circumstances dictate who is legally entitled to the escrow account funds. In one famous case, $2million sat in escrow throughout litigation until a judge ruled that the buyer had forfeited the funds by backing out. Escrow account interest can, therefore, be meaningful.


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Synonyms For Escrow Account


deposit account, trust account, blocked account, fiduciary account, blocked accounts


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Escrow Account. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 07, 2020 https://payrollheaven.com/define/escrow-account/.
Chicago Manual of Style (CMS):
Escrow Account. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/escrow-account/ (accessed: April 07, 2020).
American Psychological Association (APA):
Escrow Account. PayrollHeaven.com. Retrieved April 07, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/escrow-account/

Definition Sources


Definitions for Escrow Account are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020