A legal arrangement in which an asset (such as cash or securities) is deposited into an account under the trust of a third party (the escrow agent) until satisfaction of a contractual contingency or condition. For example, in mergers and acquisitions (M&A) transactions, purchasers often require that a portion of the purchase price be placed in escrow to secure post-closing obligations of the vendor (such as purchase price adjustments and indemnification obligations).

In the Corporate & Commercial Litigation context, it is common to pay settlement funds into escrow by depositing them into the trust account of one of the lawyers, to be released when the action has been dismissed. A consent to judgment may also be held in escrow. The consent can be brought to court if a party defaults in performing its obligations under a settlement.

In a commercial real estate acquisition, the parties often require that the closing documents and closing funds be placed in escrow until which time as they are to be released from escrow at closing in accordance with a closing escrow agreement or document registration agreement.

In addition, purchasers often require that a portion of the purchase price be placed in escrow to secure post-closing obligations of the vendor (such as purchase price adjustments).