Escrow is a term used to describe a component of a commercial
transaction between two or more parties where assets are held by a
third party, called an escrow agent, pending completion of certain
conditions to the commercial transaction.
The need for an escrow agent is usually written into the
commercial agreement and the respective parties then agree on a
suitable independent agent to hold the escrow assets. Reasons for
holding assets in escrow vary, for example, assets may be held
pending tax filings, as a reserve for any potential liabilities or
simply until conditions precedent are met on the underlying
transaction.
Escrow Agreements
Once selected, the appointment of the escrow agent is usually
written into an escrow agreement. The escrow agreement will set out
the terms and conditions under which the escrow assets are held and
released. Escrow arrangements can be for a day or two or they may
last for years, dependent upon the reason for the escrow. The
