Definition
Escrow is an arrangement in which a neutral third party holds funds and documents on behalf of a buyer and seller until the agreed-upon conditions of the transaction are met. The escrow holder follows the instructions in the contract and disburses funds and records at closing.
In a typical home purchase, escrow holds the earnest money, coordinates with the title company and lender, and ensures that funds and the deed change hands only when every condition is satisfied.
Why it matters
Escrow is the mechanism that makes a transaction safe for both sides: neither party has to trust the other directly. Coordinating with escrow on documents and deadlines is a core part of getting to close.
Keeping escrow steps, deadlines, and documents organized on the same record as the rest of the transaction reduces the back-and-forth that delays closing.
Related terms
- Earnest MoneyA good-faith deposit a buyer makes to show serious intent to purchase, held in escrow until closing.
- Closing DisclosureA standardized five-page form detailing the final terms and costs of a mortgage loan, delivered before closing.
- Commission Disbursement AuthorizationA document instructing the closing or escrow agent how to pay out real estate commission at closing.
Realm keeps escrow milestones, documents, and deadlines on one record so the path to close stays organized.