An escrow company or agent is an independent third party that handles aspects of the purchase and related loan transaction. The escrow company will often:
- Hold the down payment until the closing
- Receive the amount of the loan from the lender
- Transfer the down payment and mortgage money to the seller
- Transfer and record the deed of title to the buyer or title company, and
- Make sure the lender is protected by filing and recording the mortgage with the local county recorder of deeds.
In some states the escrow functions are handled by a licensed title insurance company or an escrow company, while in other states an attorney handles the transaction. The purchase is said to be held in escrow pending certain investigations, inspections, and contingencies.