Escrow is an arrangement where a third party holds money or documents until agreed conditions for their release have been met. In some American markets, an escrow company coordinates this process while a home purchase moves toward closing.
In Ontario, we generally use different terminology and a different process:
The deposit is held “in trust.” In a typical resale transaction, the buyer’s deposit is held in a real estate brokerage’s trust account—often the listing brokerage’s—under the terms of the purchase agreement. It isn’t simply handed to the seller to spend.
Lawyers handle the closing. The buyer’s and seller’s lawyers coordinate the transfer of funds and ownership, using their trust accounts to handle closing money.
So, while the underlying idea of holding funds securely until they can properly be released is familiar here, Ontario buyers are more likely to hear “deposit held in trust” than the more American term “opening escrow.” As such, buyers and sellers will generally describe their purchase as ‘conditional,’ ‘firm,’ or ‘waiting to close,’ rather than ‘in escrow.’
On a technical level, the escrow concept does play a role in Ontario transactions, but less visibly as part of the lawyers’ closing procedures rather than the deposit process, and as an underlying general legal concept. I've never heard a lawyer actually refer to escrow in my entire time in real estate.
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