American Land Title Association (ALTA) Practice Exam 2025 - Free ALTA Practice Questions and Study Guide

A third-party closing refers to a transaction in which a neutral third party acts as an intermediary to conduct the closing on behalf of both the buyer and seller. This process ensures that the interests of both parties are represented fairly and that all aspects of the transaction are handled according to regulatory requirements and industry standards. The third party is usually a title company, escrow agent, or attorney who manages the exchange of documents, funds, and the title transfer, providing an objective and professional oversight to the process.

This approach is beneficial as it helps mitigate potential conflicts of interest, ensures compliance with legal obligations, and creates a structured environment for the closing. Neutral oversight is especially important in real estate transactions, where large sums of money and significant interests are involved. The involvement of a third party not only enhances transparency but also provides a reliable mechanism for dispute resolution should any issues arise during the closing process.

Other options describe situations that are not representative of a neutral third-party involvement, such as a closing where only the buyer is present or a sale resulting from a foreclosure. These situations do not encapsulate the essence of a third-party closing, which is fundamentally about impartial management of the sale process.