In the escrow process, who is responsible for holding the funds?

In the escrow process, a neutral third party is responsible for holding the funds to ensure an impartial handling of the transaction. This party, often an escrow company or an attorney, acts as a mediator between the buyer and seller, safeguarding the funds until all terms of the agreement are met. This arrangement helps to protect both parties, ensuring that the buyer’s funds are secure while also assuring the seller that they will receive payment once their obligations are fulfilled.

The involvement of a neutral third party is crucial as it adds a layer of trust to the transaction, minimizing the risk of fraud or miscommunication. The other options involve roles that may be part of the transaction but do not serve the specific function of holding funds in escrow. For instance, a buyer's financial institution primarily provides financing; the seller is focused on transferring ownership of the property, and the real estate agent's role is typically to facilitate the sale rather than manage funds.