What Does Escrow Mean?
Susan Gruenling in an article entitled Open Sesame, outlined what it means to “open escrow.” As I was reading it, I was thinking about what the word Escrow really means and where it comes from, so I did a little research.
If you ever learned Spanish, you probably remember that the verb to write is escribir. A desk is an escritorio. The word Escrow, according to The Online Etymology Dictionary is basically a scroll that is a deed delivered to a third person to hold until a future condition is satisfied.
In real estate transactions in Arizona, the escrow is the period during which the Title/Escrow company (the third person) holds the proceeds from the sale of a home until both the buyer and seller sign their documents at which point the funds are transferred from the buyer or buyer’s lender to the seller and/or lienholders of the property being sold.
In other businesses, escrow companies are responsible for securing the funds from the buyer and holding those funds until a future condition is satisfied. When the conditions are met, the escrow company releases the funds to the seller. An example would be the process of selling a vehicle or other high dollar luxury item, like a piano, over the internet. If you have a car to sell, and someone across the country whom you do not know wants to buy it, you would most likely involve an escrow company to ensure that you get your money, and they get their car.