What is escrow?

In a real estate context, escrow refers to a neutral third-party arrangement in which funds and documents are held and managed by an independent party — typically an attorney or title company — until all conditions of the sale have been satisfied. The escrow holder is responsible for receiving the buyer's deposit, coordinating the flow of documents, and distributing funds appropriately at closing. This protects both parties by ensuring that no money or property changes hands until everything is properly in order.

In New York State, the buyer's earnest money deposit is typically held in escrow by the seller's attorney after the contracts are signed. For transactions in the Western Catskills, buyers should understand that their deposit is protected during the contract period — it should not be released to the seller until closing. If the transaction falls through due to a legitimate contingency, the deposit should be returned. Your attorney will specify the escrow terms in the purchase contract, and any disagreement over the deposit at a failed closing is handled according to those terms.