What Is Escrow?
Escrow: An arrangement where a neutral third party holds money and documents until a sale's conditions are met.
Also called: in escrow
Escrow is an arrangement where a neutral third party holds funds and documents for a home sale and releases them only when the conditions of the contract are met. "In escrow" means the home is under contract and moving toward closing.
What happens during escrow
- The escrow agent receives your earnest money
- Title is searched and insured
- Inspections, appraisal and underwriting happen
- Payoffs, prorations and closing figures are prepared
- At closing, escrow collects and pays out all funds and records the deed
How long it lasts
Typically 30 to 45 days for a financed purchase.
Two meanings
"Escrow" also refers to the escrow account your servicer keeps after closing to pay property taxes and insurance.
Good to know
In some states, closing attorneys handle these duties instead of escrow companies.