In what type of closing does a neutral third party, or escrow agent, handle the exchange?

In an escrow closing, a neutral third party, such as an escrow agent, is responsible for handling the exchange of documents and funds between the parties involved in a real estate transaction. This arrangement ensures that all conditions of the sale are met before the transfer of ownership occurs. The escrow agent holds the buyer's deposit and prepares the necessary paperwork, distributing it to the appropriate parties once all terms of the contract are satisfied.

This process protects both the buyer and the seller by ensuring that the buyer’s funds are only released when all necessary conditions have been fulfilled, which adds a layer of security and trust. This method is commonly used in real estate transactions to facilitate a smooth closing process and to minimize the risk of disputes or fraud.

In contrast, other types of closings may not utilize a neutral third party to manage the exchange of documents and funds, which can lead to complications if one party does not fulfill their obligations.