escrowed

Escrowed describes funds or assets that have been placed in the custody of a neutral third party under an escrow agreement, to be released only when predefined conditions are satisfied. In an escrow arrangement, an escrow agent or service holds assets on behalf of two or more parties and enforces the terms of the agreement to mitigate risk during a transaction.

Typically, an escrow agreement specifies conditions, timelines, and fees. The buyer deposits funds or the seller deposits assets with the escrow agent. The agent verifies that the conditions—such as delivery, title transfer, or inspection—are met and releases the funds or assets to the appropriate party. If conditions are not met, the agreement provides remedies, which may include returning the funds or transferring assets to the other party, or dispute resolution.

Common contexts include real estate closings, online marketplaces for high-value items, import/export transactions, and software or domain escrows that protect ongoing licensing or ownership. Digital escrows for cryptocurrency or tokenized assets are also used in some arrangements.

Benefits of escrowing include reduced risk, increased buyer and seller confidence, and clearer performance milestones. Drawbacks include fees, potential delays, and dependence on the escrow provider’s integrity and adherence to the agreement. Clear terms and reputable providers help mitigate these risks.

Escrow arrangements are governed by contract law and may involve additional regulatory or fiduciary requirements depending on jurisdiction and sector. They are distinct from simple holdbacks because they involve a neutral intermediary and conditional release tied to predefined criteria.