Escrow release
An escrow release is the payment of some or all of a holdback out of escrow to the seller once the conditions for releasing it have been met — typically the survival period expiring with no outstanding claim, or a claim being resolved. Until release, the funds are the buyer’s main practical protection.
Money going into escrow at closing gets attention; money coming out of escrow later usually does not, and that is where disputes tend to happen instead. The escrow agreement should say exactly what triggers a release, whether it happens automatically or needs a joint instruction, and what happens if the two sides disagree about whether a claim is still open.
What triggers a release
- The survival period for the relevant representations expiring with no notice of claim
- Resolution of a claim that was made — by payment, withdrawal or settlement
- A scheduled partial release date written into the escrow agreement
- Joint written instructions from both parties to the escrow agent
Why partial holds happen
Where a claim has been asserted but not resolved, escrow agents typically release the undisputed portion and hold back only the amount reasonably related to the open claim, not the entire fund. Getting that split right avoids tying up money that has nothing to do with the dispute, but it depends on the escrow agreement actually addressing partial release rather than staying silent on it.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryEscrow and Holdbacks in an Ontario Business Sale
- 02Treadstone LawLegal commentaryHow Long Do Representations and Warranties Survive After an Ontario Business Sale?
- 03Treadstone LawLegal commentaryIndemnity Baskets and Caps in an Ontario Business Sale
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