If you’ve ever spent a significant amount of money online, you’ve probably heard the phrase “payment in escrow”, but it’s a word with an importance that extends well beyond the online world. Escrow is essentially a form of legal holding account for funds or assets that will not be released unless specific criteria are satisfied. The escrow facility is kept by a neutral third party, who releases it when the contractual requirements are met or when acceptable instruction is received.


What exactly is an escrow account?

Simply said, an escrow account is one in which a third party keeps the escrow funds or assets until both parties’ commitments are satisfied. They are most typically used in the housing market in regard to monthly mortgage payments, with charges such as insurance and taxes (as well as yearly expenses) sometimes included.


It exists because the lender (in this example, the bank) cannot be certain that the homeowner will be able to pay their mortgage on time every month. To reduce risk, they employ an escrow account. Meanwhile, escrow is rarely utilised on a rolling basis in online transactions but rather as a one-time transaction, with the escrow account holder overseeing every stage of the procedure.

What is the process of escrow?

When there is confusion about a transaction between two parties, escrow serves as a required mediator and holding place for the funds or assets involved. Escrow is utilised in many scenarios when large sums of money, intellectual property, or assets are at stake.


Consider a new company that wants to sell its goods or services to another company in another country. The business selling will want some guarantee that it will be paid when the items or services are delivered, and the business purchasing will want to ensure that the goods come in the agreed-upon condition or that the service is performed to the agreed-upon degree of satisfaction. If the buyer places the payment in escrow, both parties are protected until they are both happy.


Why should you use escrow?

Escrow is a method of protecting your transaction and preventing fraud from occurring. Of course, this entails entrusting your fate to someone else. However, as long as it’s someone you trust, you could see it as a way of letting them handle the logistics so you can focus on other important matters.


Escrow terms

Several requirements may need to be completed before escrow is released. At the most basic level, the customer must offer the funds, and the vendor must supply the goods or services. However, there are frequently more challenging criteria to negotiate.


For example, the buyer may want to check the purchase before releasing payments, while the seller may need confirmation of payment. Particular issues might occur when one party is suspicious of the other side; in such cases, it is up to the escrow provider to act as a type of mediator. 


RedCoin IP believes in protected payment and strives to promote cybersecurity. Visit our helpful Downloads and Links page and learn how we use Escrow.com for providing safe and secure trademark sale and purchase transactions on our platform.