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  • Writer's pictureRaphael Collazo

What is Escrow in Real Estate?

In real estate, escrow refers to the process of holding funds or documents in a neutral third-party account during a transaction. Escrow is often used in real estate transactions to ensure that certain conditions are met before funds are released or documents are transferred.

Escrow is typically used in real estate transactions to protect the interests of both the buyer and the seller. For example, in a typical real estate transaction, the buyer will typically place a deposit, or earnest money, into an escrow account as a show of good faith.

Once the terms of the transaction have been met, the escrow agent will release the funds and documents to the appropriate parties. In a real estate transaction, this typically occurs when the buyer has obtained financing, the property has been inspected, and any other contingencies have been satisfied.

Escrow can also be used in other types of real estate transactions, such as when a borrower is refinancing a mortgage or when a property is being sold through a short sale. In these cases, the escrow agent may be responsible for holding funds or documents until the terms of the transaction have been met, at which point they will be released to the appropriate parties.

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