Escrow is relatively non-common banking product in Serbia partially due to its complexity. Subject of the escrow - i.e. the funds can be the money and different goods or valuables. As unnamed legal transaction escrow agreement mostly has elements of the account opening agreement, store contract, order and the deposit agreement. Titular of the escrow accounts can be physical or legal entity and the best solution in the Serbian regulatory framework is to opt for one of the contractual parties in the underlying agreement. The important element of the escrow agreement is the so-called escrow mechanism. Escrow mechanism which should be in detail and carefully defined to meet the goal of escrow agreement - transfer of funds on the basis of the uncontested documents (escrow instructions) submitted in accordance with terms defined in escrow agreement. Important characteristic of the escrow agent is its reputation and independence. The escrow agents' role should be as many mechanical and less arbitrary in order to avoid disputes. Escrow transaction is significant because it provides security to perform underlying transactions of the parties with minimal risk of occurrence of the harmful consequences as arranged escrow mechanism allows an easy return to the initial phase of the transaction in the case of failure to meet the conditions for its closing.