Escrow Payment

An escrow payment is one made to a neutral third party. In a typical transaction, the payment will be made prior to a closing date. The third party will then hold all of the money, ensuring that the buyer and seller both meet the contractual obligations that they are bound by. This form of payment provides some insurance for both parties to a transaction. Because the money will not be dispersed until all parties have performed their duties, the buyer and seller can go about their business with confidence that they won't be scammed. The escrow company that takes the payment will typically have no affiliation to either party though they will have legal duties to the parties after agreeing to take the payment. If the escrow payment is dispersed at the wrong time, the escrow company can be liable in a lawsuit to the wronged party.