Transfer of Property, 8% of the examination
Escrow
A neutral third party holding funds and documents until every condition of the transaction is met.
A valid escrow needs an enforceable underlying contract and conditional delivery of the instruments to a neutral depositary. Escrow advocates for nobody, adjudicates nothing, and cannot give legal advice to either side. Later mutual instructions signed by both parties generally supersede earlier terms, but a conflict should be resolved by a written amendment both parties sign.
See it in a question
One question from Transfer of Property, so the term lands in the context the exam uses it in.
What is the essential function of an escrow in a California transaction?
Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanour under B&P Code section 123.