Legal Definitions - escrow agreement

An escrow agreement is a legal contract between two or more parties that appoints an escrow agent to hold certain assets, documents, or money until a specific condition is met. The escrow agent is a neutral third party who is responsible for safeguarding the assets until the condition is fulfilled.

The escrow agreement typically includes:

• The identity of the escrow agent
• The duties of the escrow agent and the parties involved
• The beneficiary of the escrow
• The fees payable to the escrow agent
• The jurisdiction in which any legal disputes will be resolved
• The instructions for releasing the assets, documents, or money held in escrow

For example, let's say that a buyer and seller are entering into a real estatetransaction. The buyer wants to ensure that the seller has clear title to the property before releasing the funds for the purchase. In this case, the parties would enter into an escrow agreement with an escrow agent who would hold the funds until the seller provides proof of clear title.

Another example could be a software development project where the client wants to ensure that the developer completes the project before releasing the final payment. The parties would enter into an escrow agreement with an escrow agent who would hold the final payment until the developer completes the project according to the agreed-upon specifications.

Overall, an escrow agreement provides a level of security and protection for all parties involved in a transaction by ensuring that the conditions of the agreement are met before releasing the assets, documents, or money held in escrow.