An escrow account is a financial arrangement where a third party holds funds or assets on behalf of two other parties involved in a transaction. This account ensures that the money is only released when specific conditions are met, providing security for both the buyer and the seller. Commonly used in real estate transactions, escrow accounts help manage the transfer of funds during the buying process. In addition to real estate, escrow accounts can also be used in various situations, such as online purchases or legal settlements. They help protect both parties by ensuring that the agreed-upon terms are fulfilled before any money changes hands, reducing the risk of fraud or disputes.