Escrow is an arrangement through which parties to a CRE transaction deposit funds and deeds to a third party. Oftentimes, money and/or property are delivered to the third party, an escrow agent, for holding until certain conditions and events have been fulfilled. An escrow holder takes on several duties, including safeguarding the assets and distributing the funds only after the completion of specific conditions. The agent must act in context with the buyer's/seller's instructions promptly.

 

The parties to an escrow arrangement both agree on a third party they wish to employ. Typically, once the buyer endorses the item from the seller within an agreed time period, the escrow service then sends the payment to the seller. After all conditions have been met, the escrow agent is responsible to deliver all assets to the proper recipients. Escrow, therefore, minimizes disputes between parties to a commercial property transaction.