What Is Escrow ?
In simple terms, escrow can be described as the process of selling a property and giving the money for that property using a third party who is neutral. Basically, escrow offers protection to both the buyer and seller and ensures that each one sticks to his or her part of the purchase agreement.
In a real estate transaction, the seller will transfer the title of the property to the escrow company who will hold onto it until the buyer fulfills his or her obligations. Similarly, on his or her part, the buyer will transfer the mortgage amount to the escrow company who will ensure that the proceeds reach the seller. By having an escrow, the risk of scams is more or less eliminated.
Thanks to the internet, now escrow services are also available online especially for online businesses who deal with buyers and sellers located in different corners of the world. When a buyer makes a large purchase, there is always a risk of fraud. To ensure that no fraud takes place, an online escrow company can be used.
It may sound strange but one can also use escrow to sell intangible goods like software or other intellectual properties. When selling software, the escrow company holds on to the source codes until all the agreements are met by the seller and buyer. In case the buyer has a problem with the software and the seller is unable to fix the problem, then source codes are given to the buyer so that he or she can fix the problem on their own.
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