What is "escrow" in the context of real estate?

Escrow refers to a neutral third-party account that holds funds or documents on behalf of the parties involved in a real estate transaction until specific conditions are met. This process ensures that the buyer's funds are secure while the seller fulfills their obligations—such as completing necessary repairs or providing required documentation. It acts as a safeguard, preventing either party from accessing the funds or documents until all terms of the agreement are satisfied. This not only protects the interests of both parties but also provides a clear structure for the transaction, adding a layer of trust and security in what can often be a complex process.

In contrast, the other options do not accurately describe escrow. The finalization of a property sale pertains more to closing rather than the escrow process itself. A legal term for property ownership transfer would refer to the conveyance of title, which is separate from the escrow account's function. Lastly, financing a real estate purchase involves various methods to acquire funds for a purchase but does not encompass the concept of holding funds until certain conditions are met, which is the essence of escrow.