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Back-to-Back Escrow

Definition - What does Back-to-Back Escrow mean?

A back-to-back escrow is a conveyance escrow that sees the sale of one property fund the purchase of another directly. Once the escrow is set up, it is legally required that the monies from the sale of the first property be directed into the escrow account and used only to facilitate the purchase of the second property. There are also legally required time frames that the transaction has to be completed within, or else the escrow will become invalid and a new escrow will have to be created.

Justipedia explains Back-to-Back Escrow

A loan facility is set up, which is the escrow, and which allows for the transfer of funds from the sale of one property to the purchase of another. The purpose of the escrow is to cut through the legal requirements that a bank has when funding a purchase, and it speeds up the sale and purchase of the properties involved.

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