Escrow

Escrow is an arrangement in which a neutral third party holds money, documents, or both on behalf of the parties to a transaction, releasing them only when agreed conditions are satisfied. In a home sale, the buyer's earnest money deposit is typically placed in escrow after the contract is signed, and it stays there while inspections, financing, and title work proceed. Who serves as the escrow holder varies by region: it may be a title company, an escrow company, an attorney, or a real estate brokerage holding funds in a trust account.

For an agent, escrow is where contract language meets real money, and mishandling it is one of the most heavily disciplined areas of practice. You need to know where deposits go in your market, the deadline by which received funds must be delivered or deposited, and how disbursement or refund works if a deal falls apart. Explaining escrow clearly to clients is also part of the job, since buyers are often nervous about handing over a large deposit and sellers want to understand when it becomes truly committed.

Trust fund handling rules, including who may hold escrowed funds, deposit timelines, recordkeeping, and dispute procedures, are set by state law and enforced by the state real estate commission, and regional custom determines who typically runs the escrow process. Learn your local model early: in some markets escrow is a distinct phase managed by an escrow officer, while in others an attorney or title company performs the same functions under different names. When in doubt about handling a deposit, ask your broker before acting.

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