An escrow account is an account held by a third party to facilitate a transaction. The third party will hold assets until all elements of the transaction have been completed, thereby ensuring that all parties involved fulfill their part of the contract.
The most common type of escrow account occurs during a real estate transaction. The escrow company holds the money until the deed has been transferred, to ensure that both parties are protected.
Funds can also be held in escrow contingent on other issues, such as rent being held in escrow for a landlord until a landlord fixes a property. Either way, escrow companies tend to be extremely trustworthy, as they need to be entrusted with the transaction.
An escrow company doesn’t necessarily need an additional EIN, as they hold funds on their own and pass them through to the relevant parties. When working with an escrow company, an individual will usually transfer assets directly to them and then wait until everything has been disbursed according to the transaction itself.