Types of Escrows
Escrow generally refers to money being held by a third party on behalf of the transacting parties. It is usually associated with real estate transactions. The escrow agent has the duty to account for the escrow funds and ensure that the usage of the funds is for the purpose intended. Escrow companies are also commonly used in the transfer of high-value personal and business property, and also in the completion of person-to-person remote auctions such as Ebay. A purchaser of a complex system, such as a process control software or a large industrial installation, may require the supplier to place the design into escrow, so that the purchaser remains in a position to maintain and modify the system in case of the demise of the supplier.