Oregon Real Estate Practice Test

The term "escrow" in real estate specifically refers to a process in which a neutral third party holds funds, documents, or certificates on behalf of the buyer and seller until all conditions of a transaction are fulfilled. This process ensures that the interests of both parties are protected; the buyer’s funds cannot be released until the seller fulfills their obligations (such as transferring the title or providing certain disclosures), and the seller can be assured that the funds are secure and will be released to them upon meeting the agreed conditions.

In the context of real estate transactions, escrow provides a level of security and trust, thereby facilitating a smoother closing process. The role of the escrow agent or company is critical, as they manage the paperwork and facilitate communication between both parties. This is fundamental in completing a real estate transaction, making it distinct from property valuation, agreements, or listings, which serve different purposes in the process of buying and selling real estate.