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 Virginia, an escrow or escrow account is a legal arrangement where a third party, known as an escrow agent, holds a document or property in trust while a transaction is being finalized. This is common in real estate transactions, where an escrow account may hold funds like earnest money or a deed may be held in escrow until all conditions of the sale are met. The escrow agent's role is to ensure that the property or funds are only released when all contractual obligations are fulfilled by the parties involved in the transaction. Virginia law requires that escrow agents act in a fiduciary capacity, meaning they must act in the best interest of the parties and cannot benefit personally from the property or funds held in escrow. The use of escrow accounts in Virginia is regulated to protect the parties involved in the transaction, ensuring that the transfer of ownership or possession occurs smoothly and according to the terms agreed upon.