Updated
GL-E-05
Glossary · Banks and finance
Escrow - an account where money waits until the deal terms are met
A special account where money is held until the terms of a deal are met: the buyer deposits the money, the seller transfers ownership, then the money is released to the seller. It protects both sides. Used when buying property under a Golden Visa.
01 / In 30 seconds
The short answer
- What it is
- An account in which money is frozen until the conditions of a deal are met
- Where it applies
- Buying property for a Golden Visa, contributions to citizenship programmes
- Who manages it
- An independent escrow agent (a bank or a licensed firm)
- When the money is released
- Only once conditions set in advance have been met
- Can you prepare
- Yes: set out clear conditions for releasing the funds in advance
02 / In plain words
What Escrow means
Escrow is a special account in which money is frozen until the conditions of a deal are met. Put simply: the buyer does not pay the seller directly but places the money in a neutral account; the money goes to the seller only when they have performed their part.
The arrangement protects both parties. The buyer is sure they will not hand over money for nothing, and the seller can see that the funds are already reserved and will not disappear. The account is managed by an independent escrow agent (usually a bank or a licensed firm), which releases the money strictly according to the agreed conditions. In investment migration escrow is used when buying property for a Golden Visa and for contributions to citizenship programmes — the money is often held in escrow until the application is approved.
It is an important safeguard in deals worth hundreds of thousands of euros between parties from different countries who do not know each other. The conditions for releasing the money are set out in advance, and the agent cannot depart from them.
A case from practice
A client buys property for €500,000 for a Golden Visa. The money is placed in an escrow account. The condition: the funds go to the developer after the buyer’s ownership is registered in the land registry. Registration goes through — the agent releases the money. Had the deal fallen through, the money would have returned to the buyer rather than being stuck with the seller.
Where escrow is used
- Buying property for a Golden Visa
- A contribution to a citizenship programme
- Large international transactions
- Settlements between parties who do not know each other
- Deposits and prepayments
- Deals conditional on approval of the application
03 / What it covers
How escrow works
Money
- Frozen in the account
- Not paid directly to the seller
- Reserved
Agent
- An independent intermediary
- A bank or licensed firm
- Acts on the conditions
Conditions
- Set out in advance
- Registration of ownership
- Or approval of the application
Protection
- The buyer does not lose the money
- The seller sees the reserve
- Refund if the deal fails
04 / How it works
How a deal goes through escrow
Set out the release conditions
The parties agree in advance, in writing, what has to happen before the seller is paid.
The buyer pays into the account
The money goes to the agent's account, not to the seller.
The seller performs their part
Transfers the property or obtains the application approval.
The agent checks the conditions
The agent checks the documents against the agreement.
The money is released
The seller is paid; if the deal fails, the money returns to the buyer.
05 / Key facts
What you need to know
01What it is
A neutral account
The buyer pays not the seller but into the agent's account. The seller can see the money is reserved.
02Who manages it
An independent agent
A bank or a licensed firm. It releases the money strictly under the escrow agreement and cannot do so early.
03When the money moves
Once the conditions are met
For example, after the title is registered in the land registry or the programme application is approved.
04If the deal falls through
Refund to the buyer
If a refund is written into the terms, the money goes back to the buyer instead of getting stuck with the seller.
Common mistakes
Paying the seller directly, bypassing escrow
Pay into the agent's account until your side of the deal is completed.
Not writing down the release conditions
State in the agreement which event and which document trigger the payout.
Accepting the seller's agent without checks
Check the agent's licence and independence before transferring.
Not providing for a refund if the deal fails
Set out when and to which account the money is returned after a refusal.
06 / Expert advice
How to prepare in advance
Before the transfer, make sure the money goes through escrow with clearly set-out release conditions, and check that the funds will go to the seller or the fund only once your part — ownership or approval of the application — has actually been completed. It is important that the agent is independent and licensed. Then your money in the deal is protected.
What we do for you. BRIDGES GLOBAL makes sure your money in a deal goes through escrow with clearly set-out release conditions, and checks that the funds will go to the seller or the fund only once your part — ownership or approval of the application — has actually been completed.
Robert HaasHead of Company Formation
07 / Questions
Frequently asked questions
An independent escrow agent — usually a bank or a licensed firm. It releases the money strictly according to conditions set out in advance and cannot hand it over early.
Yes, if the escrow conditions provide for it. That is exactly the protection the account exists for: until the conditions are met, the money remains yours.
So that the contribution or the payment for property does not go out too early: the money is held in escrow until the application is approved, and on refusal it is easier to get back than to recover from the recipient.
Usually it is the agent’s fee — a small percentage or a fixed charge for supporting the deal. It is not comparable with the value of the deal itself and is added to the budget as a separate line.
Yes, if it is a licensed bank or a firm with a reputation. The agent acts strictly under the contract and cannot depart from the agreed release conditions.
The parties to the deal, in advance, in the escrow agreement. We make sure the conditions protect you specifically: the money goes out only once your part has actually been completed.
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