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For home purchasing purposes, an escrow period refers to a period of time when the funds and documents necessary to fulfill a homebuying contract are held by a neutral third party (e.g., a title or escrow company or attorney). Escrow periods are generally 30–60 days, and during this time, the buyer and seller prepare to close. You may also hear that the house being purchased is “in escrow.”
Any money and documents the third party is responsible for will be kept in an escrow account.* Monies may include the buyer’s earnest money deposit, down payment, funds for closing costs, and even the home’s purchase price. Documents may include the home’s purchase contract, deed, and any required financial records.
Once the real estate agreement is fulfilled or cancelled, the funds will be distributed to the appropriate parties.
* This account should not be confused with the escrow accounts mortgage companies create after a loan is funded. See below.
Further reading
See also escrow account
