escrow

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Escrow

Something of value, such as a deed, stock, money, or written instrument, that is put into the custody of a third person by its owner, a grantor, an obligor, or a promisor, to be retained until the occurrence of a contingency or performance of a condition.

An escrow also refers to a writing deposited with someone until the performance of an act or the occurrence of an event specified in that writing. The directions given to the person who accepts delivery of the document are called the escrow agreement and are binding between the person who promises and the person to whom the promise is made. The writing is held in escrow by a third person until the purpose of the underlying agreement is accomplished. When the condition specified in the escrow agreement is performed, the individual holding the writing gives it over to the party entitled to receive it. This is known as the second delivery.

Any written document that is executed in accordance with all requisite legal formalities may properly be deposited in escrow. Documents that can be put in escrow include a deed, a mortgage, a promise to pay money, a bond, a check, a license, a patent, or a contract for the sale of real property. The term escrow initially applied solely to the deposit of a formal instrument or document; however, it is popularly used to describe a deposit of money.

The escrow agreement is a contract. The parties to such an agreement determine when the agreement should be released prior to making the deposit. After the escrow agreement has been entered, the terms for holding and releasing the document or money cannot be altered in the absence of an agreement by all the parties.

A depositary is not a party to the escrow agreement, but rather a custodian of the deposit who has no right to alter the terms of the agreement or prevent the parties from altering them if they so agree. The only agreement that the depositary must make is to hold the deposit, subject to the terms and conditions of the agreement. Ordinarily, the depositary has no involvement with the underlying agreement; however, an interested party may, in a few states, be selected to be a depositary if all parties are in agreement. In all cases, a depositary is bound by the duty to act according to the trust placed in him or her. If the depositary makes a delivery to the wrong person or at the wrong time, he or she is liable to the depositor. The document or the money is only in escrow upon actual delivery to the depositary. Ordinarily, courts are strict in their requirement that the terms of the agreement be completely performed before the deposit is released. A reasonable amount of time must generally be allotted for performance. Parties may, however, make the agreement that time is of the essence, and in such a case, any delay beyond the period specified in the agreement makes the individual who is obligated to act forfeit all his or her rights in the property in escrow.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

escrow

1) n. a form of account held by an "escrow agent" (an individual, escrow company or title company) into which is deposited the documents and funds in a transfer of real property, including the money, a mortgage or deed of trust, an existing promissory note secured by the real property, escrow "instructions" from both parties, an accounting of the funds, and other documents necessary to complete the transaction. When the funding is complete and the deed is clear, the escrow agent will then record the deed to the buyer and deliver funds to the seller. The escrow agent or officer is an independent holder and agent for both parties who receives a fee for his/her/its services. 2) n. originally escrow meant the deed held by the escrow agent. 3) n. colloquially, the escrow agent is called an "escrow," while actually the escrow is the account and not a person. 4) v. to place the documents and funds in an escrow account, as in: "we will escrow the deal." (See: escrow agent)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.

escrow

1 a deed delivered to a third party to hold until fulfilment of a condition, when it will be delivered; e.g. a conveyance executed by a vendor of property and delivered to his solicitor pending completion by the purchaser's paying the purchase price.
2 more generally a service which offers to hold something for a seller pending payment of the price.
Collins Dictionary of Law © W.J. Stewart, 2006

ESCROW, conveyancing, contracts. A conditional delivery of a deed to a stranger, and not to the grantee himself, until certain conditions shall be performed, and then it is to be delivered to the grantee. Until the condition be performed and the deed delivered over, the estate does not pass, but remains in the grantor. 2 Johns. R. 248; Perk. 137, 138.
     2. Generally, an escrow takes effect from the second delivery, and is to be considered as the deed of the party from that time; but this general rule does not apply when justice requires a resort to fiction. The relation back to the first delivery, so as to give the deed effect from that time, is allowed in cases of necessity, to avoid injury to the operation of the deed, from events happening between the first and second delivery. For example, when a feme sole makes a deed and delivers it as an escrow, and then marries before the second delivery, the relation back to the time when she was sole, is necessary to render the deed valid. Vide 2 Bl. Com. 307; 2 Bouv. Inst. n. 2024; 4 Kent, Com. 446; Cruise, Dig. t. 32, c. 2, s. 87 to 91; Com. Dig. Fait, A 3; 13 Vin. Ab. 29; 5 Mass. R. 60; 2 Root, R. 81; 5 Conn. R. 113; 1 Conn. R. 375; 6 Paige's R. 314; 2 Mass. R. 452; 10 Wend. R. 310; 4 Green]. R. 20; 2 N. H. Rep. 71; 2 Watts', R. 359; 13 John. R. 285; 4 Day's R. 66; 9 Mass. R. 310 1 John. Cas. 81; 6 Wend. R. 666; 2 Wash. R. 58; 8 Mass. R. 238; 4 Watts, R. 180; 9 Mass. Rep. 310; 2 Johns. Rep. 258-9; 13 Johns. Rep. 285; Cox, Dig. tit, Escrow; Prest. Shep. Touch. 56, 57, 58; Shep. Prec. 54, 56; 1 Prest. Abst. 275; 3 Prest. Ab. 65; 3 Rep. 35; 5 Rep. 84.

A Law Dictionary, Adapted to the Constitution and Laws of the United States. By John Bouvier. Published 1856.
References in periodicals archive ?
Indeed, we will discuss ways in which escrows can be designed to encourage and facilitate subsequent conversions of escrowed allegations into independent go-it-alone complaints.
A seller's restriction on escrowed funds based solely on the passage of time is not a substantial restriction.
Escrowed encryption provides a backup decryption capability for emergency use.
Whether or not their reluctance to implement escrowed reporting mechanisms is reasonable, employers may ultimately find the current Title VII framework too comfortable to risk changing.
For example, if a customer relationship management (CRM) tool is implemented to be used as a large part of your sales force automation process, and that tool is supporting a large sales force; it is critical that you think beyond the initial cost of implementation or consultation to include training, programming, deployment, etc.-if there is a significant investment involved, then it stands to reason that it should be escrowed.
On June 5, 1998, T purchases two of the three identified properties, using $587,000 of the escrowed funds.
In a "high to low" advance refunding, the refunded issue is escrowed to the call date, rather than to the maturity date.
As a result, ESNY's Voss said, "escrow service clients have clear, fully insured protection at little or no cost and the client's attorney is out of the thankless business of record-keeping and worrying about escrowed funds."
The refunded bonds will be escrowed to maturity or redeemed at par plus accrued interest on April 1, 2019.
Reportedly, following the release of the escrowed funds in connection with the assumption of the notes by Level 3 Financing, the net proceeds from the offering of the notes will be used to finance the cash portion of the merger consideration payable to tw telecom stockholders and to refinance certain existing indebtedness of tw telecom, including fees and premiums, in connection with the closing of Level 3's proposed acquisition of tw telecom inc.
Upon the release of the escrowed funds in connection with the assumption of the notes by Level 3 Financing, the net proceeds from the offering will be used to refinance certain existing indebtedness of Global Crossing, including fees and premiums, in connection with the closing of Level 3's proposed acquisition of Global Crossing.
1031(k)-1(g)(4)) limit the taxpayer's right to the escrowed nonqualified property and thereby prevent the cash or other nonqualified property from sabotaging the tax-free character of the exchange (Regs.