In real estate transactions, what does "escrow" refer to?

The term "escrow" in real estate transactions specifically refers to a holding account for funds until certain conditions are met, such as the completion of a sale or the fulfillment of contractual obligations. This impartial third-party account ensures that both buyers and sellers are protected during the transaction process. The funds in escrow are securely held until all conditions outlined in the purchase agreement—such as inspections, loan approvals, or title clearance—are satisfied. Only then are the funds released to the appropriate parties, providing a level of security and trust in the transaction.

The other options address different aspects of real estate but do not accurately define escrow. A type of mortgage agreement relates to financing, property ownership refers to how real estate can be held, and closing a sale, while connected to the end of a real estate transaction, is broader than the specific role escrow plays in holding funds.