What is an Escrow Account

An escrow account is a temporary pass through account held by a third party during the process of a transaction between two parties.
Definition: An escrow account is a temporary pass through account held by a third party during the process of a transaction between two parties. This is a temporary account as it operates until the completion of a transaction process, which is implemented after all the conditions between the buyer and the seller are settled.

Description: In real estate, when Project loan has been taken by a developer the fund flows in the project from any source is routed through the escrow account and the escrow agent ensures repayment as per the lenders repayment schedule form the proceeds of the project. The buyers of the housing units in a project transfer the home price to the escrow account and the amount is transferred to the seller after ensuring lenders repayment schedule for development of the schedule.

Sometimes the construction linked payments are disbursed to the seller from the escrow account so that the builder has sufficient funds for completion of the project.

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