Word Watch · Term 25 of 30 · 0:50

Escrow

ProductionIllustrated Click2CE lesson; AI-assisted production with Sarah narration

In brief

Escrow involves a third party holding funds or documents and releasing them as authorized when the applicable conditions are met.

Example

Custody of a buyer's deposit does not make it the holder's personal money. Transaction escrow and mortgage servicing escrow have different purposes.

TranscriptRead along, or select a timestamp to jump there
  1. Escrow places money or documents with a third party to
  2. be held until specified conditions are met.
  3. In a real estate transaction, the escrow holder follows the
  4. applicable instructions and requirements.
  5. Watch the funds enter custody, remain held while conditions are
  6. checked, and move only when release is authorized.
  7. Custody does not make the funds the holder's own money.
  8. The word also appears in mortgage servicing.
  9. A mortgage escrow account can collect amounts for property taxes
  10. and insurance.
  11. That ongoing account is a different use from holding transaction
  12. funds pending closing.
  13. Quick check:
  14. may an escrow holder treat the buyer's deposit as personal
  15. spending money?
  16. No.
  17. The holder must follow the applicable instructions and rules.

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