What does "escrow" mean in a real estate transaction?

In a real estate transaction, "escrow" refers to a third-party arrangement where funds and documents related to the deal are held until specific conditions are met. This process helps to ensure that all parties involved fulfill their obligations before the transaction is completed. The escrow agent acts as a neutral intermediary, safeguarding the buyer's deposit and the seller’s property title until all contractual obligations are satisfied, thus facilitating a smooth transfer of ownership.

The other options relate to various legal and financial aspects of real estate but do not accurately define escrow. The concept of escrow is distinct in its function as a holding mechanism, whereas legal protections, financial products, and insurance policies each pertain to other parts of the real estate process without encompassing the core function of what escrow represents.