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A Real Estate Closing Overview

A “closing” is the legal completion of a real estate transaction– where all buying and selling parties meet to review, sign and transfer documents and funds are distributed. Typically, a closing is conducted by the title company’s agent or an attorney. If all parties arrive prepared, a closing will last approximately 45 to 60 minutes.

Lawyers 1^st Title will begin to prepare for your closing as soon as we receive a copy of your contract. A request for payoff information is sent to the seller’s lender(s), as well as requests for information regarding homeowners or condominium association dues, and/or transfer fees. If the buyer is obtaining a new mortgage, the closing team will work directly with that lender to ensure that all of their requirements are met prior to closing.

A title examination is ordered to verify that the seller has a clear title and the right to sell the property. If there are no outstanding mortgages, liens, easements, etc. that negatively affect the transfer of the property, a title commitment will be issued and documents needed to legally transfer the title of property to the buyers will be determined.

The Lawyers 1^stTitle closing team works closely with the lender, Realtors, inspection-company, appraiser, surveyor and property insurance agents to keep the transaction flowing smoothly and on schedule.

When the lender has received all the required documentation from the buyer, the loan will be submitted for approval. When the loan approval and commitment is issued, the closing team will coordinate with all parties to schedule a time for closing. The lender will prepare a loan package (including their closing instructions, a list of fees in connection with the new loan, and all loan documents) to be delivered to the closing agent. As soon as the lender’s package arrives, Lawyers 1^st will prepare the remainder of the necessary documents, together with a closing statement (also called a HUD statement) which will list and itemize all costs of the property transfer, for both buyer and seller.

Copies of the closing statement are usually faxed to the lender and the Realtors for review and for final changes or corrections if needed. If buyers and sellers have provided a fax number to the closing agent, they will also receive a preliminary copy. In order to complete the transfer and take legal possession of the property, the buyer must bring a cashier’s check to the closing, made payable to Lawyers 1^st Title Company, for the amount due as indicated on the closing statement.

The closing typically takes place at the Lawyers 1^stTitle office. The buyer, seller and their Realtors are present while the closing agent explains each document and gathers the necessary signatures. When all of the documents have been signed and the buyers have given the cashier’s check to the closing agent, the seller receives the proceeds from the sale and the keys are passed to the buyer.

After the closing, the completed loan package is returned to the lender and the original deed and mortgage are sent to the courthouse for recording in the public record. The mortgage payoffs are sent to the seller’s lender(s) and any other disbursements of funds are made as detailed on the closing statement. When the recorded deed and mortgage return from recording, they are mailed to the buyer, along with their owner’s title insurance policy.

What is Title Insurance?

For most of us, buying a home is the biggest investment we will make. How can you protect that investment? While most people understand the need for homeowners or hazard insurance to protect against theft, fire, flooding, etc., few are aware of how hidden defects in the title to their home may pose an even greater risk to their investment– one that cannot be easily remedied.

A title is the means by which a person acquires the right of ownership of real property. Having title gives the owner the right to possess, use and enjoy that real property within certain limitations. It also gives the owner the right to sell or convey that property.

Title insurance is your protection against loss or damages from any outside claims of ownership against your title. There are two basic types of title policies– the owner’s policy, which insures and protects your equity in your property, up to the purchase price; and the lender’s policy, which insures and protects the lender for the amount of the outstanding balance on your mortgage.

When you choose to purchase title insurance for your new home, Lawyer’s 1^st Title will order a title search and examination of the public records. Problems or defects in the chain of title (your property’s history) such as unpaid mortgages, liens, back taxes, and outstanding judgments against a previous owner may be revealed at that time, along with any recorded restrictions and/or easements that limit the use of the land. Those issues can then be addressed and resolved before you accept legal ownership of the property.

However, there can be problems and defects that will not be revealed by a title exam. Some examples of these hidden title defects would be fraud or forgeries on deeds or wills that affected past transfers of the property, missing heirs, clerical errors in public records, claims arising because a married person sold the property without spousal consent, and transfer of title by a minor. An owner’s policy will protect and defend your ownership rights if any claims are made against your property, whether the claim is valid or not, at no additional cost to you.

Unlike most other types of insurance, the premium for title insurance is paid only one time, at closing. And unlike most other types of insurance, the protection lasts for as long as you or our heirs retain an interest in the property. If you are unwilling to take a chance with your biggest investment, protect yourself. Title insurance just makes sense.