What Does Escrow Mean?

Escrow refers to a financial arrangement where a third party (an escrow agent or escrow holder) holds and manages money, assets, or documents on behalf of two other parties involved in a transaction.

The funds or assets are held in an escrow account until the transaction is completed, and all parties involved have met their respective obligations. This helps to ensure that the transaction is completed in a fair and secure manner, and that all parties are protected from fraud or default.

Escrow is commonly used in real estate transactions, where an escrow account is used to hold the down payment or earnest money until the sale is closed. It is also used in other transactions, such as the purchase of a vehicle or the transfer of intellectual property.
The use of an escrow account is a way to minimize risk for all parties involved in a transaction, and to provide a neutral and secure mechanism for managing the transfer of funds or assets.