Escrow is:

A deposit of funds, a deed or other instruction by one party for the delivery to another party upon completion of a particular condition or event.

The legal definition in the State of California is provided by Section 17003 of the Financial Code.

Why Do I Need an Escrow?

As a borrower, you want the assurance that no funds or property will change hands until all of the instructions in the transaction have been followed. The escrow holder has the obligation to safeguard the funds and/or documents while they are in the possession of the escrow holder, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with.