One of the most confusing terms for first time duplex buyers is the word “escrow”.
There are at least two meanings for the word in real estate, and, oddly, which definition applies seems to depend largley upon where you live.
In California, for example, a duplex is “in escrow” when the buyer and seller have come to terms on a purchase. The seller has a neutral third party (like a title company) hold the deed to the duplex, which will be given to the buyer upon completion of the sale.
Generally speaking, “in escrow” in this case refers to the period of time between an accepted purchase agreement and closing, during which the title company and the lender draft all the required paperwork and verify the title to the property is clean.
In Minnesota, however, “escrow” is a term more often used to refer to a mortgage lender’s requirement that the borrower pay 1/12th of the required property taxes and hazard insurance into an account maintained by the lender. The lender will then pay those fees on behalf of the borrower when they become due.
This process helps protect the lender from loss due to unpaid property taxes or loss due to a catastrophic event.
In other words, if you want to know how to use the word, you need to check a map!