What is the function of escrow in real estate?

The function of escrow in real estate primarily involves holding funds and documents on behalf of the buyer and seller until specific conditions of the transaction are met. This process is crucial because it provides a secure method for managing the exchange of money and important documents like the deed and title. Escrow ensures that neither party has access to these assets until all agreed-upon terms are fulfilled, such as inspections, financing, or repairs. This creates a neutral ground that protects the interests of both the buyer and seller, facilitating a smoother transaction.

In the context of real estate transactions, escrow acts as a safeguard, offering assurance that all necessary obligations are completed before the closing occurs, thereby reducing the risk for both parties involved.