Escrow account is the term which is used in the context of banking, it refers to a facility which is given to the customer in which a customer can keep his or her money in the bank where the bank or third party will not be using the money until certain specific condition gets triggered or fulfilled, that condition is mutually agreed by both the parties. Escrow account is used mainly with respect to transactions pertaining to purchase and sale of land, mortgage, during mergers and acquisitions, construction related work and so on.
It can be better understood with the help of an example suppose a borrower has borrowed $50000 at an interest rate of 12 percent per annum from lender and lender ask for an escrow account where the borrower needs to maintain a balance of $10000 so that in the event of nonpayment of interest by the borrower lender can withdraw money from that escrow account which is held in the name of borrower with the bank.
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Excellent Article Vinish. Cordial Regards for Helping mankind.