Escrow – is a contractual arrangement between transaction parties whereby an independent trusted third party (usually a bank) receives and disburses money or documents on behalf of the transaction parties, with the timing of this disbursement by the third party depending on the fulfillment of the contractually agreed terms of the contracting parties. It is widely used to support sale/purchase transactions such as buying a property, minimizing risk between parties and providing a mechanism that ensures trust and trust.

The buyer, seller, and bank sign an agreement agreeing on the necessary documents, terms, and other terms needed to close the deal, as well as all the key milestones along the way. A trustee – the bank – acts as an impartial custodian of the money or documents, keeping the risk of fraud, for example, to a minimum for both parties.

Although escrow accounts are generally used during a real estate transaction, in practice they can be used in any transaction where there is a desire to reduce the risks for all parties, for example:

Buying a used car where the money can be released at the end of a warranty period.
Deposit for renting an apartment where the money is released after the tenant moves out according to the condition of the apartment.
Provision of construction services where all or part of the money can be released when the construction work is completed to a defined standard or when defined phases (milestones) of the work are completed.
How does a trust account work?
The bank sets up an escrow account and the buyer/client transfers the agreed purchase price or payment amount;
Once the seller/contractor has the necessary documents or has met the relevant requirements, he submits documents or evidence to the bank;
The bank notifies the buyer/client that the seller has submitted the documents/evidence;
If the documents/evidence meet the requirements of the contract and the buyer/principal accepts them – and the bank completes the transaction: money is transferred to the seller/contractor and the original documents are handed over to the buyer/principal. The transaction is then closed.