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What is the meaning of the term 'escrow' in the context of real estate transactions in the USA?
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Escrow is a legal arrangement whereby an asset (often money, but sometimes other property such as art, a deed of title, website, or software source code) is delivered to a third party (called an escrow agent) to be held in trust pending a contingency or the fulfillment of a condition or conditions in a contract. Upon that event occurring, the escrow agent will deliver the asset to the proper recipient, otherwise the escrow agent is bound by his or her fiduciary duty to maintain the escrow account.. . I hope this helps.
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When you buy real estate and have a mortgage (bought the real estate by borrowing money), the mortgage company will include in the payment additional money to be held in escrow (a trust account) to be used to pay tax and insurance bills. This protects the mortgage company from losses due to nonpayment of required tax or losses occuring because of the buyer not having insurance .
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something held independently until condition met: an amount of money or property granted to somebody but held by a third party and only released after a condition has been met
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