A financial arrangement, in which the third party holds the payment while the transaction is being finalized between two parties, is known as Escrow. Escrow is a way of making transaction secure by simply keeping the funds in escrow account. The funds are released once all the terms of the agreement are met. The escrow companies are responsible for holding and regulating the funds.
The escrow companies play the role of a middleman who remains neutral between the agreements of both parties while holding the payment. Escrow companies hold the funds until they receive relevant information or until the obligations of the contract are fulfilled. The agreement is the contract between both parties in which they come to a mutual understand that a third party should play the role of neutral middle man and hold the asset till their transaction is done. In most cases, the buyer finds the escrow company to hold the funds while the transaction is being done. Anything can be held in the escrow which includes securities, money, funds and even titles to the real estate.
The length of the escrow depends on the nature of the agreement.
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