Escrow is a legal arrangement in which a third party temporarily holds money or property until a particular condition has been met (such as the fulfillment of a purchase agreement)
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The purpose of escrow is to facilitate the transaction by managing the disbursement of funds and documents. How safe is escrow?
An Escrow account is an extremely secure account where funds are held and kept safe by the Escrow Company until a particular deal is legitimately executed. It is essentially a contractual agreement wherein a third party maintains money, assets and documents until the contract is over and closed.
Escrow companies make money by charging a fee for acting as the third party throughout the transaction. In a real estate context, these fees are usually a part of the overall closing costs connected to the purchase