Escrow generally refers to money held by a third-party on behalf of transacting parties. It is best known in the United States in the context of real estate (specifically in mortgages where the mortgage company establishes an escrow account to pay property tax and insurance during the term of the mortgage). Escrow companies are also commonly used in the transfer of high value personal and business property, like Real Estate purchases.
Mortgage companies also use escrow as a means to insure that property taxes and property insurance are paid on time. Payments are typically made by the property owner and are included in the monthly mortgage payment. This escrow account is established to make sure the property is protected from tax liens and catastrophic loss.
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