Escrow

Escrow is a custodial mechanism in which an independent third party holds money or assets for a transaction and only disburses them when all agreed-upon conditions have been fully met.

In real estate and residency-by-investment transactions, an escrow account protects both the buyer and the seller. The investor's funds are kept secure and are not transferred to the project until legal milestones or refund conditions are confirmed.

This mechanism is particularly important in large investment programmes. For example, many EB-5 projects in the United States use escrow to hold investment capital until the investor's application has been approved for certain initial conditions by immigration authorities.

Carefully checking the escrow terms in a contract helps investors understand when funds will be disbursed and under what circumstances they can be refunded, thereby minimising financial risk.

Learn about the role of escrow in investment programmes via our page on United States residency by investment.