Escrow

Escrow is an arrangement where a neutral third party, often an attorney or title company in Rhode Island and Massachusetts, holds money or documents until the conditions of a deal are satisfied. Its most common use is your deposit: your earnest money sits in an escrow account after your offer is accepted and is not released to the seller until closing, protecting both sides if the deal falls through. Escrow also appears after closing, when your lender collects a portion of property taxes and homeowners insurance with each mortgage payment and holds it in an escrow account to pay those bills when they come due. The escrow holder cannot favor either party and must follow the written instructions both sides agreed to.