Escrow

Escrow is a neutral arrangement in which a third party, usually a title company or escrow agent, holds funds, documents, or assets for the buyer and seller until every condition of the deal is met. Once the contingencies clear, the escrow agent releases the funds and transfers the title.

Escrow accounts also do work after closing, during a property’s operation, holding reserves for taxes, insurance, and capital expenditures when a lender requires it. Either way, escrow protects both sides, so neither is exposed before the transaction is fully done.