What Is an Escrow Agent and Why Choosing the Right One Matters

Introduction

Escrow agents are often essential to modern commercial, legal, and financial transactions—particularly when trust and timing matter. Whether you're selling a business, funding a construction milestone, managing a divorce settlement, or purchasing a work of art, an escrow agent acts as a neutral intermediary: holding funds safely and releasing them only once agreed conditions are met.

But what exactly is an escrow agent, and how do they differ from lawyers, trustees, or banks? More importantly, what makes a good escrow agent - and how should you go about selecting one, particularly if you're looking for an escrow agent in London?

This article explores the legal role of escrow agents, compares them with similar fiduciary roles, and explains why specialist escrow providers offer the most robust, focused service.

What Does an Escrow Agent Do?

An escrow agent is a neutral third party appointed to hold funds or assets on behalf of two or more transacting parties, and to release them only once pre-agreed conditions are fulfilled. These conditions might include completion of legal documentation, surveyor certification, delivery of goods, court orders, or other objective criteria.

Escrow agents are used in high-value transactions where:

• Trust between parties is limited
• Payments are contingent on third-party actions
• Funds need to be protected from misuse, delay, or insolvency

A professional escrow agent will:

• Draft or review the escrow agreement
• Set up a segregated, safeguarded account
• Receive and hold funds independently
• Release them only when specific conditions are met
• Report, reconcile, and document all activity transparently

Like a Lawyer, Banker and Trustee - But Not Quite

Escrow agents combine elements of legal, banking and fiduciary practice - but their role is distinct:

• Like a lawyer, they understand contract execution, conditions, and risk - but, unlike solicitors, they are not conflicted by representing one party. Most law firms are also heavily restricted under SRA Client Money Rules in the types of funds they can hold.
• Like a banker, they manage client funds in secured accounts- but, unlike banks, they are not limited by credit exposure, balance sheet risk, or internal bureaucracy. They also don't lend out funds that are held in escrow. Banks that offer escrow services often do so only for their largest corporate clients and usuallyon restrictive terms.
• Like a trustee, they act in a fiduciary capacity- but, unlike trustees, their function is transactional, time-bound, and neutral - not tied to an ongoing trust relationship or discretionary powers.

In short: a professional escrow agent provides precision, neutrality, and independence, without the constraints or role conflicts of other institutions.

The Limits of Non-Specialist Escrow Services

Not all escrow providers offer the same level of service or protection. Here’s how some typical alternatives compare:

Banks Acting as Escrow Agents

• Often inflexible, slow, and document-heavy
• Typically require extensive internal approvals
• May not offer service to private clients or single-use transactions
• May require significant deposits or an ongoing banking relationship

Law Firms Holding Client Money

• Bound by strict regulatory limits (e.g. SRA Client Money Rules) - see Why can't law firms in the UK offer escrow services?
• Often reluctant to hold funds unless directly instructed on the transaction
• May be conflicted or lack internal resource to manage escrow processes properly
• May use escrow as the opportunity to upsell legal services (so as to get around the prohibition on offering escrow services to unrelated transactions)

Trustees or Family Offices

• Skilled in long-term fiduciary management, but not in transactional fund release
• Often structured for trust law, not contingent payment handling
• May need to open bank accounts, which double-hands all compliance exercises and adds time to getting the arrangements in place

Software Platforms

• Offer automation but often lack legal rigour, regulatory status, or robust safeguarding
• Ill-suited to bespoke terms, complex conditions, or cross-border risk
• May be fast to open, but are unlikely to be responsive or helpful in the event of a dispute or issue arising during the escrow term

Why Specialist Escrow Agents Offer More

Dedicated escrow providers - like dospay - are designed specifically to hold and release funds securely. It is their sole business, not an add-on or workaround. Benefits include:

• Deep specialisation: Escrow is not diluted by other services
• Speed and flexibility: Onboarding, contracting and account setup without bureaucracy
• Safeguarding: Funds can be held in safeguarded structures, including at the Bank of England
• Clarity: Fixed-fee, transparent pricing with no hidden commissions or charges
• Bespoke structure: Agreements tailored to the transaction - not forced into templates

For high-value, sensitive or multi-party transactions, this focus delivers peace of mind that funds are secure, roles are clear, and execution will not be delayed.

Looking for an Escrow Agent in London? Here’s What Matters

Many clients - particularly those dealing with UK property, litigation, or private wealth - search for an escrow agent in London. As the centre of the English Law world, it is a concentration for high-calibre professional services firms. While law firms and banks may appear to offer these services, most are limited in what they can actually provide.

If you're selecting an escrow agent in London, consider:

• Are they independent and neutral?
• Can they hold funds in safeguarded UK accounts?
• Do they understand the UK regulatory, legal and professional landscape?
• Will they be responsive, accessible, and commercially minded?

At dospay, we operate exclusively in escrow and payments - offering tailored, UK-based services to lawyers, family offices, developers, and principals. Our accounts are fully segregated and are also safeguarded, with funds being held liquid and unencumbered at the Bank of England.

Whether you're managing a one-off transaction or acting for a client needing escrow certainty, our London-based team delivers trusted, compliant service.

How to Appoint an Escrow Agent

Choosing the right escrow agent involves:

• Engaging them early - ideally during transaction structuring
• Agreeing the escrow agreement in parallel with core documentation
• Identifying all conditions, signatories and release requirements
• Ensuring the escrow agent is properly regulated and experienced

Working with a specialist ensures that this process is fast, clear, and secure - not a bottleneck or risk point.

Conclusion

An escrow agent is more than a money-holder; they are a trusted, neutral safeguard for critical transactions. While banks, lawyers and trustees may offer aspects of what’s needed, only a specialist escrow provider combines neutrality, agility and safeguarding without distraction or conflict.

For London-based transactions (or any situation with a UK nexus where control, timing and trust matter) choosing a dedicated London-based escrow agent like dospay is the surest way to deliver outcomes smoothly and securely.