A financial arrangement where a neutral third party holds money, documents, or assets until specific conditions of a transaction are met. Commonly used in real estate transactions, mergers, and acquisitions to ensure all parties fulfill their obligations before funds are released.
From Old French 'escroue' meaning 'scroll' or 'strip of parchment,' referring to the written agreement held by the third party. The word entered English in the 16th century through legal terminology. It evolved from the practice of depositing important documents with trusted intermediaries.
Escrow is like having a referee hold everyone's lunch money until the game is properly finished - nobody gets paid until everyone plays by the rules! It's the financial world's way of saying 'trust, but verify' by putting a neutral party in charge of the goods.
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