Definition of escrow

written agreement authorizing the holding of funds by a custodian, usually a bank or trust company. These accounts usually pay the same rate of interest as passbook accounts. Banks typically hold escrow accounts for real estate taxes and property insurance due on mortgaged property.

1. written instrument, such as a deed, temporarily deposited with a neutral third party, the escrow agent, by the agreement of two parties to a valid contract. The escrow agent will deliver the document to the benefited party when the conditions of the contract have been met. The depositor has no control over the instrument in escrow. Escrow now applies to all instruments so deposited.
2. money or other property so deposited is also loosely referred to as escrow. Monthly deposits by a homeowner to the mortgage holder to pay for taxes and insurance are called escrows.

money, securities, or other property or instruments held by a third party until the conditions of a contract are met.

an agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.

Example: The deed to the property and the earnest money were both placed in escrow pending fulfillment of other conditions to the contract.