The article may contain affiliate links from partners. The words, opinions, and reviews are our own. Learn how we make money to support our financial wellness mission.
Escrow is defined as money placed in the hands of a third party until specified conditions are met.
An escrow is a financial instrument held by a third party on behalf of the other two parties in a transaction. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled. Securities, funds, and other assets can be held in escrow.
In housing, an escrow are funds held in an account to be used by the lender to pay for home insurance and property taxes. The funds may also be held by a third party until contractual conditions are met and then paid out.