An Escrow account is a legal concept in which money is held by a third party on behalf of two other parties that are in the process of completing a transaction.

When you buy or sell a home, the monies will almost always be transacted in an escrow account. This account holds any money that comes in during the transaction. At the time of closing, the seller uses the escrow account to receive the funds from the buyer and the buyer's bank.

Escrow transactions are frequent in the real estate market and the stock market.