Real Estate Terms Glossary
What is an Escrow Account?
In real estate, an escrow account is usually a third-party account in which funds are kept before being transferred to the ultimate party to facilitate property transactions. An escrow account is important as it provides security against frauds and scams.
The escrow provider is usually a disinterested third party, such as a bank, with no preference about who eventually receives the funds from the account. Sometimes, a homeowner may make deposits in the escrow account on a monthly basis to help pay for significant yearly expenses.
Examples of Escrow Accounts
- Example 1: Security deposits
- Example 2: Earnest money accounts
Here’s Wikipedia’s definition of an Escrow Account .