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‘Selling Sunset’ Fans: Your Guide to Understanding ‘Escrow’ and How it Differs in Australia

A new season of “Selling Sunset” is here, and you may be wondering about the term “escrow.” Interestingly, this term is commonly used in American real estate transactions, but you rarely hear it in the context of Australian real estate. In this blog post, we’ll explore what escrow is and its significance in American real estate, and also shed light on how the process differs in Australia.

What is Escrow?

Escrow refers to a financial arrangement where a third party holds and manages funds and documents on behalf of two parties involved in a transaction. This neutral third party, known as an escrow agent or a settlement agent, ensures a secure and smooth transfer of property ownership from the seller to the buyer.

The American Escrow Process:

  1. Offer Acceptance: Once a buyer’s offer is accepted by the seller, both parties enter into a purchase agreement or a contract.
  2. Earnest Money Deposit: The buyer typically provides an earnest money deposit, a sum of money that demonstrates their seriousness about purchasing the property. This deposit is often held in an escrow account.
  3. Escrow Opening: The escrow process begins when the buyer and seller designate an escrow agent. The agent collects all necessary documents and funds related to the transaction.
  4. Title Search and Inspection: The escrow agent ensures a title search is conducted to verify the property’s legal ownership and any liens or claims against it. The buyer also has the opportunity to conduct inspections and review disclosures.
  5. Contingencies and Due Diligence: Depending on the terms of the contract, the buyer may have specific contingencies, such as obtaining financing or a satisfactory inspection report. If any contingencies cannot be met, the contract may be canceled.
  6. Funding and Documentation: Once all contingencies are satisfied, the buyer secures financing and provides the necessary funds to the escrow agent. The agent prepares the required legal documents for the transfer of ownership.
  7. Closing: Upon completion of all necessary steps, including signing the final documents and disbursing the funds, the escrow agent officially closes the transaction. The property ownership is transferred to the buyer.
Escrow in Australian Real Estate

While the concept of escrow is widely used in the United States, Australian real estate transactions typically do not involve a formal escrow process. Instead, the settlement process in Australia usually involves a direct transfer of funds and property between the buyer and seller or their representatives.

In Australia, a buyer generally provides a deposit as a sign of their intent to purchase, but it is not held in a separate escrow account. The deposit is typically held by the seller’s real estate agent or solicitor and is released to the seller upon settlement. The settlement period in Australia often involves a negotiation and agreement on the terms between the parties, allowing for a smooth transfer of ownership.


In the world of American real estate, escrow plays a vital role in ensuring a secure and transparent transaction between buyers and sellers. However, in Australian real estate, the process differs, and a formal escrow arrangement is not typically used. Understanding these differences can help you navigate the real estate landscape more effectively, whether you’re buying or selling a property in either country.

Sunset Bl. LA, California, USA. Text on green sign, red traffic lights, palm trees and blue sky background. Sunny spring day.

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