third-party agent

Construction Escrow Accounts: When Money Sits in a Third Party's Hands

A construction escrow account holds project funds with a third-party escrow agent rather than in the owner's or contractor's direct control. They're used for retention on public work, lender-required draw mechanisms, disputed-funds deposits, and closeout carve-outs. The escrow structure protects both sides but adds administrative steps that the AP team needs to understand.