An escrow account is a kind of “neutral zone” for people completing some monetary transaction. It’s a bank account that isn’t owned by anyone participating in the transaction, so the money doesn’t have to change hands until all the details have been hammered out. Putting money into an escrow account shows you’re serious about making the transaction, but it protects everyone in case the agreement falls through.

Escrow accounts are often used in real estate deals to prevent a client’s money from mingling with other funds. When the deal is closed, the money in the escrow account is transferred to its ultimate owner – in this case, the seller.