In one sentence
The distinction between closings where funds disburse at signing (wet) and where funds wait for post-signing conditions like recording (dry).
The longer version
In a wet closing, funds move at the closing table; in a dry closing, signing happens but disbursement waits for conditions such as confirmed recording. State law and lender practice determine which applies.
The distinction affects timing and escrow mechanics, and the closing instructions specify exactly which conditions gate disbursement.
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