top of page

What does escrow mean in the UK?

What does escrow mean, and how does it help protect consumers and businesses against fraud?

Some transactions, like grocery shopping or paying for a hotel room, are simple. Others are far more complex, time-consuming and risky – for example, buying a house or an expensive piece of art. 

Escrow arrangements, both in the UK and elsewhere, help reduce the inherent risk of a large or complicated transaction. Below, we’ll explain what escrow means and show how it helps protect consumers and businesses against fraud. 

What is escrow in the UK? 

In the UK, escrow is a contractual agreement in which a stakeholder or escrow agent holds funds on behalf of two or more parties during a transaction, releasing them when all parties have fulfilled their obligations. 

The word “escrow” comes from the old French word “escroue”, meaning “scroll” or “scrap of paper" – in this case, an agreement or deed held by the trusted third party. 

The conditions upon which funds are released from escrow vary. During a property transaction in England, for instance, funds are sent from the buyer’s solicitor to the seller’s solicitor on completion day, providing all parts of the conveyancing process have taken place.  

What is an escrow account used for? 

Stakeholders use escrow accounts to hold funds securely on behalf of the parties involved in a financial transaction. Once assets are in escrow, neither the buyer nor the seller has access to them until the terms of their agreement are fulfilled.  

UK escrow accounts can be bank accounts or accounts held with alternative banking institutions. They’re commonly used to store funds during real estate transactions, mergers and acquisitions, large purchases and other scenarios where two or more parties need to meet certain obligations before deals can conclude.  

What does a UK escrow service do? 

Here's a step-by-step outline of the escrow process in the UK: 

  • Agreement. Parties involved (buyer, seller and escrow agent) agree on the terms and conditions of the transaction, including the use of an escrow service. 

  • Escrow Setup. The parties select an escrow agent or service provider trusted by all parties and establish an escrow agreement outlining the terms of the arrangement. 

  • Deposit. The buyer deposits the agreed-upon funds into the escrow account, which is securely held by the escrow agent. 

  • Verification. The escrow agent verifies the deposit and ensures that it meets the conditions outlined in the escrow agreement. 

  • Transaction. Once all conditions are met (for example verification of payment, delivery of goods or completion of services), the escrow agent releases the funds to the seller or carries out instructions per the agreement. 

  • Completion. After the transaction is complete, the escrow agent provides documentation to all parties confirming the release of funds or completion of the transaction. 

Throughout the process, the escrow agent acts as a neutral intermediary, safeguarding the interests of all parties involved and ensuring a fair and secure transaction. 

What can be held in escrow? 

Many different things can be held in escrow, including electronic funds, cash, stocks, securities, real estate title deeds and other business or personal assets. 

When escrow assets are physical – a valuable painting or piece of jewellery, for example – they're typically held in a vault or other secure location by the escrow agent. 

Who pays the escrow fees? 

In the UK, the party responsible for paying escrow fees can vary depending on the terms of the escrow agreement itself. Generally, it's a matter of negotiation and can be outlined in the contract or agreement between the buyer, seller and escrow agent. 

Sometimes, the party benefiting the most from the escrow arrangement may bear the cost, while in other cases, the fees might be split between the buyer and seller.  There may also be cases where one party agrees to cover the escrow fees as part of an incentive to close the deal. 

How long does the escrow process take? 

The escrow process can take as little as a few days or as long as several months, depending on transaction complexity, communication and the specifics of the escrow agreement.  

Simple transactions with straightforward terms and minimal conditions can happen relatively quickly. Complicated transactions involving multiple parties and extensive due diligence can take much longer to finalise. 

To ensure things go as smoothly as possible, it's essential for all parties involved to stay responsive, provide documentation and information promptly, and stick to the timelines outlined in the escrow agreement. 

Interpolitan escrow solutions make life simpler 

As an escrow agent, we understand that reducing global transaction risk is a top priority for businesses. When making financial transactions, either as a buyer or a seller, it’s important to ensure that funds are held securely.


To learn more about how our UK escrow solutions help manage the secure transition of funds for corporate and private transactions, get in touch today


bottom of page