Escrow is a term used to describe money held by a third party on behalf of two other parties involved in a transaction. This third party, known as an ESCROW agent, holds the funds until all conditions of the agreement are met, at which point the funds are released to the appropriate parties. ESCROW is commonly used in real estate transactions, where the buyer and seller agree to use an ESCROW agent to hold the purchase funds until the title is transferred and the deed is recorded.