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What is escrow?

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Quick answer

Escrow is when a trusted third party holds money or assets during a transaction until both sides meet their conditions. It protects buyers and sellers — for example, holding a home buyer's funds until the sale legally completes. A neutral third party holds funds or assets.

Key things to understand

  1. A neutral third party holds funds or assets.
  2. It's released only when conditions are met.
  3. It protects both buyer and seller.
  4. It's common in real estate and online deals.

People also ask

What is escrow?
An arrangement where a neutral third party holds money or assets until both sides of a deal meet their terms.
How does escrow protect buyers and sellers?
Funds are only released when agreed conditions are met, so neither side risks paying or delivering early.
Where is escrow commonly used?
In real estate purchases, large online transactions, and mergers.