Escrow is an arrangement in which a disinterested third party, called an escrow holder, holds documents and funds on behalf of a buyer and seller, and distributes them according to the buyer's and seller's instructions.
An escrow holder...
• opens the order for title insurance, if the lender has not already ordered.
• sends out a copy of the title insurance to all parties.
• receives funds from the buyer and/or lender.
• prorates insurance, taxes, rents, etc.
• disburses funds for title insurance, recordation fees, real estate brokerage, lien clearance, etc.
• prepares final statement for each party, indicating amounts to be disbursed for services and any futher amounts, necessary to close escrow.
• records deed and loan documents, delivers the deed to the buyer, loan documents to the lender and funds to the seller, closing the escrow.