Updated
GL-E-09
Glossary · Application and process
Escrow agent - the independent party holding the money until the terms are met
01 / In 30 seconds
The short answer
- Who it is
- An independent party that holds money until the conditions of a deal are met
- Why it is needed
- The buyer does not pay blind, and the seller does not transfer the asset without a guarantee of payment
- Who it can be
- A bank, a licensed lawyer, a notary, a specialised company
- Where you encounter it
- Buying property, share transactions, programme settlements
- The main rule
- The conditions for releasing the money are set out in writing and unambiguously
02 / In plain words
What Escrow agent means
An escrow agent is an independent third party that holds the buyer’s money until the seller has met the conditions of the deal. Put simply: the money is no longer with the buyer but not yet with the seller — it sits with a neutral holder and goes out only once the obligations have been fulfilled.
The arrangement protects both parties at once. The buyer does not transfer a large sum blind and can see that the money is reserved. The seller knows that the payment is real and does not depend on the buyer’s mood. A bank, a licensed lawyer, a notary or a specialised company may act as escrow agent — depending on the country and the type of deal.
The most important thing in such an arrangement is the wording. The conditions for releasing the money must be set out as specifically as possible: which document, from whom, by what date constitutes the grounds for payment. Vague wording such as “after completion of the deal” turns protection into a source of dispute. The status and licence of the agent itself are checked separately.
A case from practice
When a property under construction was bought, the money went not directly to the developer but through escrow, released in stages against supporting documents. When the timing of one stage slipped, the funds simply stayed with the agent — instead of a dispute over recovering money already transferred.
When an escrow agent is needed
- Buying property abroad
- A purchase at the construction stage
- Buying a stake in a business
- Settlements under an investment programme
- A deal with an unfamiliar counterparty
- Staged payment by milestones
03 / What it covers
What is checked in the arrangement
Agent
- Licence and status
- Jurisdiction
- Reputation and track record
Conditions
- Grounds for releasing the money
- The list of documents
- Timelines
Money
- Where the funds are held
- A segregated account
- The agent’s fee
Dispute
- How it is resolved
- Refund to the buyer
- Applicable law
04 / How it works
How escrow works
Agreeing the terms of the deal
The parties agree what must happen before the seller is paid.
Transferring the money to the agent
The buyer transfers the money to the agent's account.
The seller meets the conditions
The seller transfers the property or completes a stage.
Checking the documents
The agent checks the documents against the agreement.
Releasing the money to the seller
The seller is paid in full or in stages.
05 / Key facts
What you need to know
01Who it is
A neutral custodian
A bank, licensed lawyer, notary or specialist firm, independent of both parties.
02Why
Protecting both sides
The buyer does not pay blind, and the seller sees the payment is real.
03The key point
The wording of the terms
Which document, from whom and by when triggers payment. "On completion of the deal" invites a dispute.
04The money
Kept apart from the agent's funds
The funds are segregated. The refund procedure for the buyer is set out in advance.
Common mistakes
Accepting an agent the seller proposed
Check the agent's independence or choose one together.
Vague release conditions
List the documents and deadlines after which the seller is paid.
Not providing for the deal falling through
State when and where the money goes back to the buyer.
Transferring before the agreement is signed
Pay only after all parties have signed the escrow agreement.
06 / Expert advice
How to prepare in advance
Before the money is transferred, the agent’s status and licence are checked, and the conditions for releasing the funds are set out in writing and unambiguously: which document and from whom serves as the grounds, by what date, and what happens if the deal falls through. The procedure for refunding the buyer is fixed separately — the clause people remember only when it is already needed.
What we do for you. In property transactions and programme investments we insist on a transparent settlement arrangement: an independent agent, written conditions for releasing the money and a set-out refund scenario. It is standard practice, not a sign of distrust of the seller.
Igor VentsHead of real estate, Title Deed and property checks
07 / Questions
Frequently asked questions
An independent third party that holds the buyer’s money until the conditions of the deal are met: a bank, a licensed lawyer, a notary or a specialised company.
The contract describes the obligations, while escrow secures their performance with money: the sum is already reserved but goes to the seller only when the conditions are met.
Both parties. An agent proposed only by the seller and not checked in any way is a bad idea: it must be independent.
The money is returned to the buyer in the manner set out in the escrow agreement. That is exactly why this scenario is fixed in advance.
The fee depends on the country, the sum and the type of deal. It is agreed before the funds are transferred and fixed in the agreement.
Not always, but with large sums and unfamiliar counterparties it is sensible practice. In some countries escrow settlement is required for certain types of transaction.
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