Money held by a neutral third party until a property transaction’s conditions are met is held in escrow.
In a real-estate sale, an escrow agent may hold the buyer’s deposit, the deed, loan funds, or other documents. The agent releases them only when specified contractual conditions—such as inspections, financing, or closing—have been completed.
Escrow separates the parties’ money and documents from the buyer and seller, reducing the risk that one side receives the benefit before fulfilling its obligations. The exact duties of the escrow holder depend on local law and the transaction agreement.
The word is also used after closing. Mortgage servicers often collect monthly amounts for property taxes and insurance in an escrow account, then pay those bills when they come due. That account is different from purchase-closing escrow.