What is escrow and how does it work?

Escrow is a neutral third party that holds funds and documents during a real estate transaction to protect both buyer and seller. In Arizona, escrow is handled by a title company, not an attorney. Once the purchase contract is signed, the buyer deposits earnest money with the title company, which holds it in a trust account. During escrow, the title company orders the title search, coordinates with the lender, prepares closing documents, and ensures all conditions of the contract are met. At closing, the title company disburses funds to the seller, pays off existing liens, records the deed, and issues title insurance. Escrow typically lasts 30 to 45 days depending on financing and contract terms.