What Is an Escrow?
Escrow is a service which provides the public with a means of protection in the handling of funds and/or documents. Escrow enables the Buyer and Seller to transact business with each other through a neutral party, thereby minimizing their risk.
In the Escrow, all parties involved give their instructions to this neutral intermediary, the “Escrow holder” whose duty it is to assure that no funds or property will change hands until all instructions have been carried to completion.
Breaking down Escrow: Very simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition, agreement or event. The New York Escrow Law – Section 17003 of the Financial Code – provides the legal definition.
What Types Of Transactions Go Through Escrow?
Most contracts that involve the transfer, lease, or financing of real or personal property can be placed in Escrow. You may be involved in Escrow not only when you buy or sell a home, but also when you buy a mobile home, sell a business, or transfer stock in a closely held business.
Prize fighters have even been known to have their purses guaranteed through an Escrow depository. The Buyer and Seller should demand the protection of Escrow for any transaction with a substantial investment.