Published On: April 18th, 2024


People shaking hands to close a deal on a large transaction

Escrow services not only add several layers of trust and accountability to large transactions but they do so while not requiring the buyer and seller to be in the same location to complete the transaction.

What are the advantages of using Escrow for large transactions? Escrow, or specifically an escrow agent, is a company that helps handle large transactions between two parties. Escrow agents add layers of trust and accountability to the money transfer and fulfillment of the purchase agreement without an attorney being involved.

When To Use An Escrow Agent For Non-Real Estate Purchases

Although real estate is generally the most common large transaction in which an individual or a business will use an escrow agent, it is also very common for non-real estate transactions.

For all types of large purchases, escrow ensures:

  • Fiduciary protection
  • Neutral third party
  • Regulatory compliance
  • Ease and peace of mind

Did you know that the escrow agent you use doesn’t have to be in the buyer or seller’s state? 

You can use an escrow agent from a completely different state to assist with a large purchase.

Business discussion for a merger between organizations6 common types of non-real estate transactions that can benefit from using an escrow agent include:

  • Mergers and Acquisitions (M&A): Large business acquisitions and mergers will commonly employ escrow agents for holdback with funds, securities, or documents between parties until all conditions of closing are met. Some of these conditions may be government regulatory approvals or resolutions of certain outstanding issues.
  • Online Transactions and E-commerce: Online transactions, specifically with high-value items, may employ escrow agents to act as a middleman between buyer and seller. These escrow agents may, for example, have the seller hold back until the buyer receives the item(s) they purchased.
  • Software and Intellectual Property Transactions: During transactions where software deals are involved, there are several things that could be held by an escrow agent until certain conditions are met. For example, domain names, source code, intellectual property, and usage rights may not be transferred until payments are made.
  • Large Asset Purchases: Escrow is commonly used for high-value items like vehicles, aircraft, and industrial machinery, holding money until the purchase is completed.
  • Legal Disbursements and Settlements: In legal cases or settlements, escrow can hold funds until a certain stage of the legal process is completed or until agreed-upon conditions are met.
  • Licensing Agreements: When a licensing agreement is made between two companies, escrow can ensure that compliance is met and payments are secured. This can apply to licenses for products, software, technologies, or patents.

Overall, using escrow with any large transaction will make the process easier and provide your organization with some much-needed peace of mind.


Which Is The Best Escrow State?

The “best” escrow state will be subjective, depending on your organization’s needs. However, you generally want a state that has certain regulations that protect your transaction. Ultimately, it’s most beneficial for the buyer and seller to have a quick and painless process.

Some of the factors that will determine the best escrow state for you are:

  • The complexity of the transaction
  • Where both parties involved in the transaction are located
  • Preferences for regulation oversight
  • The ease of conducting business

Arizona maintains comprehensive laws and regulations and emphasizes proper handling of funds documents funds and documents, with strict requirements for licensing and fiduciary responsibilities – but to meet the needs of one of the fastest growing states over the past half century is also designed to make the process and cost easier for all those involved

Arizona, as an escrow state, maintains comprehensive laws and regulations with an emphasis on the proper handling of funds and documents. It also has strict requirements for licensing and fiduciary responsibilities. With Arizona’s rapid growth over the past 50 years, the process is designed to be easy and the costs competitive.

Regardless of what state you ultimately decide to use, a lot of responsibility will be placed on the escrow agent to handle your transaction. Therefore, you want to look for a trusted escrow agent that will:

  • Demonstrate receipt of funds/assets
  • Reliably manage documentation
  • Coordinate any necessary communications
  • Manage escrow account
  • Disbursement of funds
  • Close and confirm the transaction

Arizona Escrow & Financial (AEF) will help work with organizations and attorneys outside of Arizona on any large transactions. AEF provides ease of mind in large transactions by handling all financial aspects. If you want to learn more about the escrow process or our services, please contact us.


Commercial Real Estate Financing Banner with Phoenix Arizona Background