When you are choosing escrow account the question “Trust or not to trust other part of agreement?” is not actual anymore.
Escrow account that sometimes also called impound account is an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party (usually a bank) receives and disburses money or documents for the transacting parties.
Account is reducing the risk between the parties and providing a mechanism which ensures trust and confidence in the deal until all contracts and agreements have been fulfilled.
The buyer, the seller and third part (usually the bank) sign an agreement, whereby they agree on necessary documents, terms and other conditions as required to complete the deal, along with any critical milestones along the way. An escrow agent – the bank, acts as an impartial holder of the money or documents, and in this way keeps the risk of such things as fraud to a minimum for both parties. Note that escrow fees vary from company to company (bank to bank).
An escrow account can be used for the sale of a house or flat (for Real Estate transaction) and it can reduce the risks to all parties. It gives guarantee for all parties.Escrow is basically a third party that will hold the homebuyer's money and the home seller's deed or deposits for a property rental or selling/buying object will be in safe and can be transacted to the part of contract when points of this contract will be done only and until all the paperwork is completed.
Other option for escrow account is purchase of a second hand car, where the money may be released at the end of a warranty period.
Escrow is a financial tool that will help to parties and so everyone will be satisfied with the outcome.
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