50+ Sample Escrow Agreements

Escrow Agreement: What Is It?

First of all, escrow refers to a certain deed or bond that is kept by a third party for temporary custody. And it will only take effect once the conditions have been met. Meanwhile, an escrow agreement refers to the binding agreement or contract that defines the terms, conditions, and stipulations among the parties including their roles and responsibilities. And the third party or escrow agent is expected to safeguard any asset of value according to the specific conditions set in the agreement.

What Are the Inclusions of an Escrow Agreement?

Just like any agreement, an escrow agreement has its own set of clauses or inclusions. Although there can be differences in every escrow agreement’s content and layout, it is likely that it consists of the following information:

Escrow Agent: Who is the appointed escrow agent or third party in the escrow agreement? The agent’s identity should be specified from the name, address, and contact list.Definition of Agreement: An official statement of agreement that defines how escrow agreement plays out is crucial. Although the document title “Escrow Agreement” is a simple introductory statement, it should be expounded in the definition of the agreement to express what escrow agreement really means.Escrow Funds: How much is the escrow fund? Be sure to set the official price list in the document by expressing it in numbers and in words for clarity. If the asset is not monetary, then determine the value of that asset instead.Conditions on the Release of Funds: Now that there are escrow funds and assets in the agreement, state the conditions for the release of such assets. The same goes for the conditions that will cancel the release of funds.Use of Funds: The escrow agent deals with more than just safeguarding funds and assets. They may use it for other purposes and your agreement should clarify what the acceptable uses of those assets are.Liability Agreement: Insert the escrow agent’s liabilities. What are the conditions that will make the agent be responsible for something according to law? A liability agreement clause in the escrow agreement is essential even for the rest of the parties involved.Escrow Costs: Assigning escrow agents has its own set of fees. So be sure to enumerate those expenses and even incorporate fee receipts as proof of escrow costs.Terms and Conditions: The meat of the escrow agreement would be the general terms and conditions. That includes the jurisdiction venue in case litigation continues and other legal agreements.

How to Create an Escrow Agreement

With sufficient knowledge of the escrow agreement’s definition and inclusions, you are ready to take your knowledge to the next level by making the escrow agreement itself. And here is what you need to know on how to make an escrow agreement in just four easy steps:

  • Step 1: Talk with the Parties Involved Ahead

    Conduct a formal business meeting with the parties such as the payer, recipient, and the escrow agent to talk about the possible escrow agreement ahead. Talking actually helps such as knowing what each party is okay and not okay in the agreement. Thus, take note of those significant preferences so you will know what to add and not to include in the official escrow agreement document soon.

  • Step 2: Download a Sample Escrow Agreement

    There is no need to write escrow agreements from scratch. Simply use any of the sample escrow agreement templates enlisted in the article above. There are even more examples such as an escrow agreement to hold funds sample, an escrow agreement for source code sample, etc. Just choose a template you want to work with and you can personalize its data and format afterward.

  • Step 3: Add the Escrow Agreement’s Standard Inclusions

    From the title of the document, escrow agent information, down to the agreement’s terms and conditions, be sure to insert the basic inclusions of an escrow agreement, which were discussed before. These parts will slowly complete your agreement. And you can even add more elements such as the termination of contract clause and indemnification clause. As much as possible, only add components that are necessary and relevant to escrow agreement.

  • Step 4: Make Reading and Fact-Checking a Habit

    Just like most assessment reports, reading and fact-checking are absolutely necessary. This is how you can witness your mistakes and still have the time to fix them before it is too late. The last thing you want to do is to submit a flawed agreement. Otherwise, you would likely witness conflicts and issues in the process of your escrow agreement later on. So read from top to bottom, ensure that everything is crystal clear, and rectify what needs to be corrected before submitting it to the parties involved.


What is the purpose of escrow?

Escrow is a term often used in real estate businesses and transactions, especially in protecting buyers and sellers in the payment process. Take mortgage agreements, for example. Escrow agents can hold funds for homeowners’ insurances and taxes in the meantime before closing the deal. Release of funds will only happen when specific conditions go exactly as planned.

Who are the main parties to an escrow agreement?

Generally, there are three parties in an escrow agreement. This would be the buyer/purchaser, the seller/supplier/trading company, and the third party/escrow agent/escrow service provider. And it is crucial for escrow agreements to identify these parties, especially when their signatures are needed at the very end of the agreement’s document.

Can you hold documents in escrow?

Besides monetary assets, escrow agents can also hold documents. Documents include a deed, mortgage, promise letter to pay money, bond, license, check, real estate sale contract, and a patent.

What are the types of escrow accounts?

There are numerous types of escrow accounts and they can be differentiated according to their purpose. And the most common examples are the independent home buyers or sellers, real estate sales escrow, mortgage escrow, renters escrow, and construction escrow.

What is an escrow refund?

An escrow refund is when escrow accounts contain more funds than expected. An example is when you get a check with the remaining balances. And when escrow accounts exceed, loan services may refund the excess funds.

Despite how the term “third party” receives a bad rep in romantic relationships, a third party in the legal aspect is actually essential. That is if you fully defined the requirements of parties in a contract or agreement. Thanks to an escrow agreement, you can trust your assets to a third party before it is actually given to another. As long as you have the escrow agent’s identity information, escrow funds, acceptable use of funds, and a sample template to work with, rest assured, creating the agreement runs seamlessly. Optimize a sample escrow agreement template now!