Who holds funds and documents in escrow until closing in a Colorado real estate transaction?

• A. An escrow agent acting as a neutral third party.
• B. The seller.
• C. The buyer.
• D. The lender.

Answer: (A)

Holding funds and documents in escrow is about neutrality and protection in a Colorado closing. An escrow agent, typically a title company or sometimes an attorney, serves as a neutral third party with a fiduciary duty to both buyer and seller. They keep the earnest money and important documents (such as the deed and title commitments) in an escrow or trust account and release them only when all closing conditions are satisfied and the transaction is ready to record. This arrangement prevents either side from misusing funds or documents and ensures that funds, instruments, and prorations are handled correctly at the closing. The seller and buyer are participants in the deal, but they do not hold the escrow funds or documents themselves, and while the lender may provide financing at closing, they do not serve as the escrow holder.