In which type of closing does a third party hold all money and documents until the terms are satisfied?

The correct answer is closing in escrow. In a closing in escrow, a neutral third party is appointed to hold all funds and documents related to the transaction until all conditions of the sale are fully met. This process provides an additional layer of security for both the buyer and the seller, as neither party gains access to the other’s funds or property until both have met their obligations under the agreement.

Escrow is particularly useful in real estate transactions because it helps ensure that all necessary inspections, repairs, and legal documents are completed before the transfer of ownership takes place. It mitigates risk and helps facilitate trust between the involved parties, making it a preferred method in many real estate deals.

In contrast, other types of closings, such as traditional closings, often involve the direct exchange of money and paperwork in-person without a third party managing the escrow process. Online closings may use technology to facilitate the transaction but do not specifically require a third party holding the funds and documents until terms are satisfied. Simplified closings may refer to straightforward transactions without intricate conditions or where fewer documents are processed, but they still do not typically involve an escrow arrangement.