escrow - wikipedia, the free encyclopedia

7/26/2019 Escrow - Wikipedia, The Free Encyclopedia

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EscrowFrom Wikipedia, the free encyclopedia

An escrowis:

a contractual arrangement in which a third party receives and disburses money or documents for the

primary transacting parties, with the disbursement dependent on conditions agreed to by the transacting

parties, or

an account established by a broker for holding funds on behalf of the broker's principal or some other

person until the consummation or termination of a transaction;[!or,

a trust account held in the borrower's name to pay obligations such as property ta"es and insurance

premiums#

$he word derives from the %ld French word escroue, meaning a scrap of paper or a scroll of parchment; this

indicated the deed that a third party held until a transaction was completed#[&!

Contents

$ypes

# nternet escrow

#& (anking

#) ntellectual property

#* +aw

# -eal estate

#. /ergers and Ac0uisitions

& +egal implications

) 1ee also

* -eferences

2"ternal links

Types

2scrow generally refers to money held by a third3party on behalf of transacting parties# t is best known in the

4nited 1tates in the conte"t of real estate 5specifically in mortgages where the mortgage company establishes an

escrow account to pay property ta" and insurance during the term of the mortgage6#[)!2scrow is an accountseparate from the mortgage account where deposit of funds occurs for payment of certain conditions that apply

to the mortgage, usually property ta"es and insurance# $he escrow agent has the duty to properly account for the

escrow funds and ensure that usage of funds is e"plicitly for the purpose intended# 1ince a mortgage lender is

not willing to take the risk that a homeowner will not pay property ta", escrow is usually re0uired under the

mortgage terms# 2scrow companies are also commonly used in the transfer of high value personal and business

property, like websites and businesses, and in the completion of person3to3person remote auctions 5such as

e(ay6, although the advent of new low cost online escrow services has meant that even low cost transactions are

now starting to benefit from use of escrow# n the 47, escrow accounts are often used during private property

transactions to hold solicitors' clients' money, such as the deposit, until such time as the transaction

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completes#[*!%ther e"amples include:

purchases of a second hand car, where the money may be released at the end of a warranty period

deposits for a property rental, where the money is released after the tenant moves out

provision of construction services, where the money may be released when the building work is complete

to a defined standard, or when defined parts of the work are complete#

An unrelated type of escrow is when a purchaser of a comple" system, such as bespoke process control software

or a large industrial installation, may re0uire the supplier to place the design into source code escrow, so that the

purchaser remains in a position to maintain and modify the system in case of the demise of the supplier#

Internet escrow

nternet escrow has been around since the beginning of nternet auctions and commerce# t was one of the many

developments that allowed for trust to be established in the online sphere# [!

As with traditional escrow, nternet escrow works by placing money in the control of an independent and

licensed third party in order to protect both buyer and seller in a transaction# When both parties verify the

transaction has been completed per terms set, the money is released# f at any point there is a dispute betweenthe parties in the transaction, the process moves along to dispute resolution# $he outcome of the dispute

resolution process will decide what happens to money in escrow# With the growth of both business and

individual commerce on the web traditional escrow companies have been supplanted by new technologies#

n the 2uropean 4nion, the ayment 1ervices irective, which commenced on


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escrow; if no problem occurs, they fall into the coin vault of the machine# [9!

Intellectual property

1ource code escrow agents hold source code of software in escrow >ust as other escrow companies hold cash#


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+ook up escrowin

Wiktionary, the free

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Eternal links

FAOs About 2scrow Accounts for onsumers# 4#1# epartment

of Bousing and 4rban evelopment# &9939.3&9# Archived from

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2scrow recommended for online and (itcoin transactions# 4#1#

epartment of Bousing and 4rban evelopment# &9)39.3&9# Archived from the original on &9)39.3&9#

-etrieved from https:88en#wikipedia#org8w8inde"#phpItitleJ2scrowGoldidJ?&&*9)&*=

ategories: +egal documents +egal terms -eal property law ersonal finance

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apply# (y using this site, you agree to the $erms of 4se and rivacy olicy# WikipediaP is a registered

trademark of the Wikimedia Foundation, nc#, a non3profit organiDation#

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escrow - wikipedia, the free encyclopedia

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