What does an Escrow Agent do?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 24 November 2019
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An escrow agent is a person or entity which holds documents, money, and other materials on behalf of two parties while they work out an agreement. Once the terms of the agreement are finalized, the escrow agent may release the materials being held, in accordance with the agreement. Escrow agents act as neutral third parties to smooth transactions between people who may never actually meet in person.

There are a number of settings in which an escrow agent may be used. They are commonly involved in high value transactions, especially if the transaction is complicated. The role of the escrow agent is to safely hold materials while the terms of the deal are worked out, and the agent may also hold materials after a deal has been reached, as part of the terms of the agreement. For example, the escrow agent can hold cash deposits, titles to property, and other types of documentation. Likewise, escrow accounts may be established to pay maintenance fees on a property. An escrow account can also hold funds on behalf of the buyer, releasing those funds to the seller when a contract is signed.


The escrow agent is not involved in the facilitation of the agreement. This is handled by attorneys and other agents for both parties. The agent serves both buyer and seller, confirming that the deal goes as planned and intended and making sure that the needs of all parties are satisfied. Escrow agents often work directly with the agents for both parties, with the agents working on behalf of their clients.

People can choose which escrow agent they work with, depending on the type of agreement they are reaching. In some areas, one company tends to handle most escrow needs and there may not be very much freedom of choice for people making business arrangements. In other regions, buyer and seller may need to negotiate to agree on which escrow agent should be used, usually taking advice from their representatives.

Requirements to become an escrow agent vary. Because escrow agents are relied upon to handle sensitive and valuable materials, they must be trustworthy and free of conflicts of interest. Individuals who work for escrow companies usually need to prove that they are reliable, and may need to indicate that they will comply with an ethical code. Companies themselves must meet legal obligations to demonstrate that they will behave ethically and appropriately with their clients.


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