In one sentence
The neutral party holding funds or documents and releasing them only when agreed conditions are met.
The longer version
The escrow agent, often the title company, holds the closing's funds and signature pages and releases them per the escrow instructions. Neutrality is the point: no party can move the money unilaterally.
Clear release conditions are what keep an escrow from becoming a standoff, and the escrow instructions are a closing document in their own right.
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