Escrow means "money, contract, bill, movable etc. entrusted to a third party until the conditions are fulfilled" in Turkish. Escrow's meaning and function in the legal field is no different. Accordingly, escrow can be defined as "the custody of the money / asset to be paid for the work / condition to be realized with the contract concluded between the parties in the contractual relations by an independent third party as a trustee until the performance of the job / condition for the purpose of guarantee . " The key word here is "escrow" .
To explain the Escrow mechanism through a simple example; Under a contract signed between the buyer and seller party, a party undertakes the obligation to perform a job; the other party undertakes to pay the other party for this work. However, since the issue of paying for the work is always a risky matter, the reward for the work is stored in the escrow account of the broker, which is defined in the escrow agreement and is an independent third party. As the stages of the realization of the work determined in the Escrow contract and the main contract between the parties are completed, the money / asset that is decided to be paid in return for the work is paid by the intermediary to the party providing the progress payment in the pre-agreed periods. In case of failure of the work, the deposited amount is returned to the depositary. In this way, escrow acts as a bridge between the contracting parties. In this way, the risk of payment is eliminated and the trust of the parties to each other and to the basic contract concluded between them is renewed.
Although Escrow is one of the indispensable elements of international business life, it is not yet an institution regulated in Turkish Law. Escrow, which has been used among traders in our country in recent years, is an important guarantee and assurance tool in terms of contractual acts.