Escrow or an escrow account—also known as an impound account or a reserve account—is a legal document that transfers possession or ownership of a legal document or property to a third party who is not a party to the underlying transaction that the escrow is intended to secure.

For example, escrow or an escrow account may be used to secure a transaction for the sale of real property (a warranty deed held in escrow) or for a loan to purchase real property (a deed of trust transferring ownership to the escrow).

Escrow or an escrow account might also refer to a bank or other account that holds money or other property (earnest money) while the parties to the underlying transaction are in the process of completing the transaction and fulfilling their contractual obligations.

An escrow agreement requires the escrow or escrow agent (a person or entity) to hold a document or property in trust for a specified amount of time or until the occurrence of a certain condition (full payment) or until both parties to the underlying transaction have fulfilled their contractual obligations—at which time the escrow agent is to hand over the document or the property to the grantee (buyer of real property) or the mortgagee (lender for purchase of real property), for example.

An escrow is like a trust account in that the escrow agent holds the document or property in trust for the benefit of another person and not for the benefit of the escrow agent. Although the person or entity that holds the property in trust under the terms of an escrow is often referred to as an escrow agent, they are not an agent with authority to act on behalf of and bind or obligate a certain person (a principal) as an agent is traditionally empowered to do under a state’s common law (court opinions or case law).

In Connecticut, an escrow account, often used in real estate transactions, is a legal arrangement where a third party holds funds or documents until certain conditions are met. This third party, known as an escrow agent, acts as a neutral entity to securely hold the items in trust, ensuring that neither the buyer nor the seller can access them until all parts of the agreement are fulfilled. For instance, during the sale of a property, the buyer's earnest money may be held in escrow to show that the offer is serious and to protect the funds until the sale is complete. Similarly, a deed might be held in escrow until a loan for purchasing property is fully paid. Connecticut law regulates escrow agents and accounts to ensure they operate fairly and legally. The escrow agent does not have the traditional authority of an agent to act on behalf of the parties involved; their role is strictly to hold and eventually disburse the escrow contents according to the terms of the escrow agreement.