Free template
Escrow Holdback Agreement Template
Secure post-closing obligations and reduce deal risk by clearly defining holdback funds, release conditions, and escrow procedures with this Escrow Holdback Agreement Template.
Downloaded 4239 times
Download template
Escrow Holdback Agreement Template
This Escrow Holdback Agreement (the “Agreement”) is made and entered into as of [Effective Date] (the “Effective Date”) by and among:
Depositing Party / Buyer: [Buyer Name], [Entity Type], with an address at [Buyer Address] (“Buyer”).
Receiving Party / Seller: [Seller Name], [Entity Type], with an address at [Seller Address] (“Seller”).
Escrow Agent: [Escrow Agent Name], [Entity Type], with an address at [Escrow Agent Address] (“Escrow Agent”).
Buyer, Seller, and Escrow Agent may be referred to individually as a “Party” and together as the “Parties.”
1. Background and Purpose
1.1 Transaction. This Agreement relates to [Transaction Description], pursuant to that certain [Asset Purchase Agreement/Stock Purchase Agreement/Other Agreement] dated [Agreement Date] (the “Primary Agreement”).
1.2 Purpose. The Parties agree to hold a portion of the payment in escrow to secure certain obligations and/or potential claims as described below.
2. Definitions
2.1 Holdback Amount. The amount to be deposited into escrow is $[Holdback Amount] (the “Holdback Amount”).
2.2 Escrow Account. The escrow account will be held at: [Bank/Institution] in an account titled: [Account Title] (the “Escrow Account”).
2.3 Escrow Period. The escrow period begins on [Funding Date] and ends on [End Date] (the “Escrow Period”), unless extended under this Agreement.
2.4 Claim. A “Claim” means a written notice asserting that funds should be withheld or released due to:
☐ Indemnification claim under the Primary Agreement
☐ Working capital or purchase price adjustment
☐ Unpaid liabilities or taxes
☐ Completion of post-closing deliverables
☐ Other: [Define]
3. Funding the Escrow
3.1 Deposit. Buyer will deposit the Holdback Amount into the Escrow Account on or before [Funding Deadline].
3.2 Form of Funds. The deposit will be made by: ☐ Wire ☐ ACH ☐ Check ☐ Other: [Method].
3.3 Confirmation. Escrow Agent will provide written confirmation of receipt to both Buyer and Seller.
4. Escrow Agent Duties and Standard of Care
4.1 Limited Role. Escrow Agent’s duties are limited to holding and disbursing funds strictly in accordance with this Agreement.
4.2 No Investigation Duty. Escrow Agent is not required to investigate the validity of any Claim unless this Agreement expressly requires it.
4.3 Standard of Care. Escrow Agent will exercise reasonable care in safeguarding the funds.
4.4 Reliance. Escrow Agent may rely on notices and instructions that appear to be properly authorized.
5. Release of Holdback Funds
5.1 Scheduled Release (Optional). Funds will be released as follows:
☐ 100% to Seller on [Release Date], if no valid Claim is pending
☐ Partial releases: [Percent/Amount] on [Dates]
☐ Milestone-based release: [Milestones/Proof Required]
5.2 Release Request. A Party requesting release must deliver a written release request to the other Party and Escrow Agent, including supporting documentation if required.
5.3 Objection Period. The non-requesting Party has [__] business days to object in writing (an “Objection Notice”).
5.4 No Objection. If no Objection Notice is received by the deadline, Escrow Agent will release the requested amount as instructed.
5.5 Objection. If an Objection Notice is received, Escrow Agent will hold the disputed amount until receiving:
☐ Joint written instructions signed by Buyer and Seller, or
☐ A final order/award from a court or arbitrator, or
☐ Other: [Define]
6. Claims Against the Holdback
6.1 Claim Notice. A Party making a Claim must deliver a written claim notice to the other Party and Escrow Agent during the Escrow Period, stating:
the basis of the Claim,
the amount claimed, and
supporting detail reasonably sufficient to understand the claim.
6.2 Hold Amount. Upon receipt of a proper Claim Notice, Escrow Agent will hold the claimed amount (or the disputed amount) and may release any undisputed remainder per Section 5.
6.3 Resolution of Claims. Claims will be resolved by:
☐ Mutual written settlement instructions
☐ The dispute process in Section 9
☐ Other: [Define]
7. Interest, Fees, and Taxes
7.1 Interest. Interest earned on the Escrow Account will be:
☐ Paid to Seller ☐ Paid to Buyer ☐ Retained in escrow and released with principal ☐ Other: [Define]
7.2 Escrow Fees. Escrow Agent’s fees will be paid by:
☐ Buyer ☐ Seller ☐ Split equally ☐ Paid from escrow funds (if permitted)
7.3 Tax Reporting. Tax reporting (if any) related to interest will be handled by: ☐ Buyer ☐ Seller ☐ Escrow Agent ☐ Other: [Define].
8. Termination of Escrow
8.1 End of Escrow Period. At the end of the Escrow Period, Escrow Agent will release any remaining undisputed funds to: ☐ Seller ☐ Buyer ☐ Split as: [Rule].
8.2 Pending Claims. If a Claim is pending at the end of the Escrow Period, Escrow Agent will continue to hold the disputed amount until resolved under this Agreement.
9. Dispute Resolution
9.1 Good Faith Negotiation. The Parties will attempt to resolve disputes in good faith within [__] days.
9.2 Forum. Disputes will be resolved by:
☐ Mediation
☐ Arbitration
☐ Court litigation in [County, State]
9.3 Escrow Agent Protection. Escrow Agent may interplead funds (deposit them with a court) if the Parties provide conflicting instructions, and the Parties will cooperate and pay associated costs as required by law.
10. Representations and Authority
10.1 Authority. Each Party represents it has authority to enter into and perform this Agreement.
10.2 Compliance. The Parties will comply with applicable laws related to the transaction and escrow.
11. Notices
11.1 Notice Method. Notices must be sent by: ☐ Email ☐ Certified mail ☐ Courier ☐ Other: [Method].
11.2 Notice Contacts.
Buyer Email: [Email]
Seller Email: [Email]
Escrow Agent Email: [Email]
12. Governing Law and Miscellaneous
12.1 Governing Law. This Agreement is governed by the laws of [State].
12.2 Entire Agreement. This Agreement, together with the Primary Agreement, is the entire agreement regarding the escrow holdback.
12.3 Amendments. Amendments must be in writing and signed by Buyer, Seller, and Escrow Agent.
12.4 Severability. If any provision is unenforceable, the rest remains effective.
12.5 Counterparts; Electronic Signatures. This Agreement may be signed in counterparts and by electronic signature.
Signatures
By signing below, the Parties agree to be bound by this Escrow Holdback Agreement as of the Effective Date.
Buyer: [Buyer Name]
Title/Role: [Title]
Date: [Date]
Signature: ___________________________
Seller: [Seller Name]
Title/Role: [Title]
Date: [Date]
Signature: ___________________________
Escrow Agent: [Escrow Agent Name]
Title/Role: [Title]
Date: [Date]
Signature: ___________________________
Flash deal
Flash deal
Today
Today
No time to fill it up? Generate your custom agreement with AI Lawyer in seconds
What’s Included
Legal Research
Legal Research
Legal Research
Contract Drafting
Contract Drafting
Contract Drafting
Document Review
Document Review
Document Review
Risk Analytics
Risk Analytics
Risk Analytics
Citation Verification
Citation Verification
Citation Verification
Easy-to-understand jargon
Easy-to-understand jargon
Easy-to-understand jargon
Details
Learn more about
Escrow Holdback Agreement Template
Click below for detailed info on the template.
For quick answers, scroll below to see the FAQ.
Click below for detailed info on the template.
For quick answers, scroll below to see the FAQ.
ESCROW HOLDBACK AGREEMENT TEMPLATE FAQ
What is an escrow holdback agreement?
An escrow holdback agreement is a contract where part of a purchase price or payment is withheld and held by a neutral third party (the “Escrow Agent”) until certain conditions are met. It’s commonly used in business sales, real estate transactions, and large services deals to cover post-closing adjustments, indemnity claims, or completion of specific obligations.
When should you use an escrow holdback?
Use a holdback when there’s a clear post-closing risk — such as unresolved liabilities, pending deliverables, working capital adjustments, potential indemnity claims, or required regulatory approvals. It gives the parties a practical way to close the deal while keeping funds available if something goes wrong.
What should be included in an escrow holdback agreement?
It should identify the escrow agent, define the holdback amount and funding method, list release conditions and timelines, explain how claims are made and verified, describe how disputes are resolved, set rules for interest and fees, and clarify what happens at the end of the escrow period if no claims are made.
Who can act as the escrow agent?
An escrow agent is usually a bank, title company, attorney, or professional escrow service. The key is that the escrow agent is neutral, follows written instructions, and has a clear process for holding and releasing funds based on documented triggers.
How are disputes over escrow releases handled?
Many agreements use a notice-and-objection process: one party submits a release request or claim notice, the other party has a set time to object, and if there’s a dispute, the escrow agent holds the funds until the parties provide joint instructions or a final decision from arbitration/court. Clear timelines and documentation requirements reduce delay and conflict.
What is AI Lawyer?
AI Lawyer is an AI-powered assistant that helps you create and customize legal and business document templates online. It guides you through key sections, suggests wording, and explains complex concepts in simple language. AI Lawyer does not replace a licensed attorney or provide legal advice, but helps you prepare better documents faster and more confidently.
Similar templates
Other templates from
Financial Agreements
Money back guarantee
Free trial
Cancel anytime
AI Lawyer protects
your rights and wallet
Money back guarantee
Free trial
Cancel anytime
AI Lawyer protects
your rights and wallet
Money back guarantee
Free trial
Cancel anytime
AI Lawyer protects
your rights and wallet
Money back guarantee
Free trial
Cancel anytime