Escrow

In a rental context, escrow can refer to a security deposit held under state law, rent paid into a court registry during a habitability dispute, or funds held at closing pending a repair.

A tenant withholding rent under a habitability claim may be required to pay that rent into court escrow while the dispute is decided.

Escrow exists to take the money out of the argument. Once funds are held by a neutral party, neither side can spend them or use them as leverage, which is what makes a dispute resolvable on its merits.

Keep escrowed money in an account that is not your operating account and never net it against other balances. Record the escrow on its own ledger line with the condition that releases it, so anyone reading the account later can see why the money is there.

Mixing escrowed funds with operating cash is the serious one — in many states it is a statutory violation on its own, separate from whatever the underlying dispute was about. Confirm the account and interest rules that apply where the property sits.