What is escrow and how does it work?

Escrow is how a real estate sale closes safely. Instead of buyer and seller exchanging money and documents directly, a neutral escrow officer at the title company holds the buyer’s funds and the signed documents in trust. The officer follows the instructions in the purchase agreement, confirming that the loan is funded, the title is clear, taxes are prorated, and all conditions are satisfied. Only then does the money go to the seller and the deed get recorded to the buyer. Escrow protects both parties by making sure nothing changes hands until everything is in order.