What Escrow Actually Is

Escrow is a neutral third party that holds the money and the documents until every condition of the contract has been satisfied. It does not represent the buyer or the seller, and it does not give either side advice.

The Deposit

Your initial deposit goes to the escrow holder, not the seller. It sits there until closing, at which point it is credited toward your purchase, or until the contract terminates, at which point who receives it depends on which contingencies were still in place.

Title and the Preliminary Report

Early in escrow you receive a preliminary title report listing everything recorded against the property, including easements, liens, and use restrictions. Reading it properly is one of the highest-value hours in the transaction.

Contingency Periods

The inspection, appraisal, and loan contingencies are your exit routes. Each has a deadline, and each expires whether or not you have finished your review, so missing one quietly converts your deposit from refundable to at risk.

Recording and Possession

Closing happens when the deed records with the county, which is not always the same day the loan funds. Possession can be a separate date again, negotiated in the contract, and assuming they all coincide is a common way to end up without keys.