Escrow

Escrow refers to a setup where a trusted third party temporarily holds assets on behalf of two parties involved in a transaction. The goal is to make sure both sides fulfill their obligations: the buyer gets what they’re paying for, and the seller receives payment. By holding the asset until all conditions are met, the escrow agent reduces the risk that either side will fail to deliver.

Escrow agents are typically companies or institutions known for financial stability, minimizing the risk that they might go bankrupt while managing your assets. For their role, escrow agents usually charge a fee—this cost might be covered by either one or both of the parties in the deal. Escrow is commonly used in real estate, online sales, and other transactions where trust needs to be ensured.