Escrow
Escrow, in law, a deed or other document, a sum of money, or a piece of property held temporarily by an individual or institution (called the escrow agent) as part of a transaction involving two other parties. The use of escrow often occurs in the sale of a house—the buyer places funds in escrow in a bank, where they are held until the seller delivers the deed. This action protects each party against bad faith by the other.
The term escrow also is commonly used in relation to mortgages. The property owner pays the mortgagee (the financial institution holding the mortgage) installments toward future payment of taxes and, in some cases, property-insurance premiums. The mortgagee holds these funds in an escrow account until the bills come due.