What type of closing is conducted with a neutral third party holding the funds?

An escrow closing is characterized by a neutral third party, known as an escrow agent, who manages the funds and the necessary documents to ensure that the transaction is carried out fairly and securely. In this arrangement, the buyer deposits funds with the escrow agent, who holds them until all conditions of the sale are met. Once both parties fulfill their obligations, the escrow agent disburses the funds to the seller and transfers ownership of the property to the buyer. This method provides security for both parties, as neither funds nor documents change hands until all terms of the contract are satisfied.

Concurrency, face-to-face, and virtual closings do not necessarily involve a neutral third party managing the funds. In these other types of closings, the parties may engage directly with each other, often transferring funds and documents without the protective layer that an escrow process provides. The presence of an escrow agent is unique to the escrow closing, promoting trust and reducing the risk of fraud in the transaction.