Define: Escrow

UK Accounting Glossary

Definition: Escrow

Quick Summary of Escrow

Escrow is a contractual arrangement in which a third party receives and disburses money or property for the primary transacting parties, most generally, used with plentiful terms that conduct the rightful actions that follow.

What is the dictionary definition of Escrow?

Dictionary Definition

An arrangement under which a deed, money, security, or other property or document is held by a neutral third-party (called an escrow agent) in trust for a first-party (called grantor, obligor, or promisor) for a specified period or until the occurrence of a condition or event. The escrow agent is duty-bound to deliver the asset or document in his or her possession to a named second-party (called grantee, obligee, or promisee) upon the fulfilment of the condition(s) or the happening of a stated event, as established in the escrow agreement.

a bond, deed, or other document kept in the custody of a third party and taking effect only when a specified condition has been fulfilled.

  1. legal A written instrument, such as a deed, temporarily deposited with a neutral third party (the escrow agent), by the agreement of two parties to a valid contract. The escrow agent will deliver the document to the benefited party when the conditions of the contract have been met. The depositor has no control over the instrument in escrow.
  2. legal In common law, escrow applied to the deposits only of instruments for the conveyance of land, but it now applies to all instruments so deposited.
  3. legal Money or other property so deposited is also loosely referred to as escrow.


Full Definition of Escrow

Funds paid by one party to another to hold until the occurrence of an event, after which the funds are released to a designated individual.

In contract law, escrow is a legal arrangement whereby an asset is held by a third party, called the escrow agent, for delivery from one party to another once certain conditions are met. Escrow is commonly used in high-value transactions. Documents, title to real estate, software code, and of course, cash, can all be held in escrow. In real estate, the buyer’s deposit is typically held in escrow until the closing, when title is transferred. The fiduciary duty of the escrow agent is generally to the seller. The importance of picking a trustworthy escrow agent cannot be understated. There have been several cases of attorneys who, while acting as escrow agent for their client, took funds held in escrow.


Examples of Escrow in a sentence

When Charles closed on the house, he didn’t need to move in right away, and he allowed the previous homeowners to remain there, once they agreed to pay rent into an escrow account with his lawyer.
Both parties in the bidding war over the antique collection were required by the seller to put ten per cent of their bid into an escrow account as a guarantee of their payment.

Synonyms For Escrow

deposit, impounding, trusted third party, security, guarantee

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Escrow. Payroll & Accounting Heaven Ltd. April 02, 2020
Chicago Manual of Style (CMS):
Escrow. Payroll & Accounting Heaven Ltd. (accessed: April 02, 2020).
American Psychological Association (APA):
Escrow. Retrieved April 02, 2020, from website:

Definition Sources

Definitions for Escrow 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: 5th January 2020.