Which phrase describes an "escrow account"?

An escrow account is best described as a financial account held by a third party. This account functions as a neutral intermediary, where funds are held until the completion of a transaction, ensuring that the buyer and seller fulfill their obligations. In real estate transactions, for example, the escrow account is often utilized to manage funds related to property taxes and insurance premiums, ensuring that they are paid on time for the benefit of both the lender and the borrower.

The use of a third-party account is crucial to provide assurance to all parties involved—such as buyers, sellers, and lenders—that the transaction will proceed smoothly and that funds will be disbursed at the appropriate time when predetermined conditions are met. This arrangement helps protect against default and fosters trust in the entire lending process.