A Guide to Smooth Real Estate Closing
Perhaps the largest and the most important single transaction or investment you’ll ever make is buying and/or selling a property. What better reason to protect yourself against some of the possible pitfalls of such transactions. To understand the role of an attorney in a real estate transaction is of utmost importance.
- Initial Contact:
A prospective Buyer and Seller should consult an attorney prior to signing any Contract for Sale or Purchase of Real Estate. The attorney will advise you with suggestions on ways to solve any problems before entering into a legally binding obligation. Even when it is not practical to consult an attorney in advance of signing a binder, you have the right, when you sign the contract, to select an attorney of your choice to represent you in the actual transfer of the property. The experience of the Real Estate Broker may be invaluable in recommending an attorney.
Generally speaking, the contract is prepared by the attorney for the seller and signed by the buyer and seller at his office. However, many real estate contracts are entered into via mail or email wherein the contract is first signed by the Buyer and then the Seller. At the time of contract, the Buyer will then deposit the agreed down payment with the Seller’s attorney in escrow until closing.
Some important components of a contract may include:
• Amount of the down payment,
• Type of mortgage,
• Contingencies of sale,
• Condition of the property,
• Compliance with building codes,
• What’s included and what’s not,
• The date of the closing,
• Is this a “Short-Sale”
- Title Examination:
One of the attorney’s most important contributions to a real estate closing is the verification that the seller has a good marketable title to the real estate. Furthermore one of the attorney’s initial responsibilities in representing a buyer is to have a reputable title insurance company examine and abstract the public land records to investigate the information surrounding the title to the property. The facts revealed by the search of the land records will determine a number of factors, e.g. legal ownership, party to the contract, the estate or degree of the title, presence of unpaid mortgages, judgments or similar liens, any existing restriction, easements or rights of way for roads, public utilities, etc., which may limit or interfere with the buyer’s use of the property. These and other such questions can significantly affect a transaction.
- Pre-Closing Requirements:
Many items need to be secured in advance of the closing, such as:
• Certificate of Occupancy or Compliance,
• Termite Inspection,
• Bank Payoff statement,
• Cesspool certificates,
- Closing Responsibilities:
The attorney is usually responsible for preparation of other necessary documents that would be considered as part of the closing, such as:
• The Contract,
• The Deed,
• Mortgage and promissory note (if required),
• Escrow agreements,
• The settlement statement.
The closing or the final settlement is also conducted by the attorney. The attorney will supervise the transfer of all appropriate funds between the Buyer, Seller, Lender and all other interested parties as well as the transfer of the deed. The attorney explains, executes and exchanges the documents and all financial matters appropriate to the purchase and sale set out fully for review by all parties. The lender will, in most cases, require, as a condition of the loan, that a Mortgage Policy of Title Insurance be procured at the borrower’s expense. The prudent buyer will usually procure, with the assistance of his attorney, an Owner’s Title Insurance Policy in order to protect his interest as an owner. The premium for title insurance is paid at the closing and is a onetime payment. Papers being passed around from person to person. Copies are runoff and telephone calls are being made. Your attorney will coordinate and explain each step.
The attorney will prepare a final settlement statement and will verify that the proper documents have been recorded. This should be a comprehensive document with all the papers that were involved in the closing, the deed, mortgage, CO’s, inspections, surveys and a financial recap of all monies that were either dispersed or received.
- Choosing the right Attorney:
It is important that you select an attorney who is customarily engaged in real estate practice and is capable of efficiently and completely handling your transaction. An experienced and competent attorney will negotiate and secure terms that will be advantageous to his or her client. An attorney’s role in a real estate transaction may include any number of facets of the transaction:
• Consultation prior to the signing of a contract,
• Contract preparation,
• Review of a closing cost,
• Preparation of closing documents,
• Review of the title search,
• Attendance and representation at the closing, and
• Preparation of a final settlement statement.
All of this work is done in close coordination with the Buyer, Seller, Realtor, and Lenders. The attorney strives to assure that this complex procedure is carried out in the most pleasing and expedient manner possible.
In making your selection, it is important to understand the function of the attorney, as well as the services being rendered. An awareness of these facts will serve to alleviate much of the confusion and apprehension involved in the buying and selling process. The attorney is usually paid at the closing along with other disbursements.
Contact for ‘Free Consultation’ the experienced, dedicated, and committed Real Estate attorneys at Pheterson Spatorico LLP or visit us at https://psnlawgroup.com/