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Lecture Notes: Closings

 

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Preparation for the Closing:

 

A closing is simply the bringing together of all the requirements of the sales contract so that everything is done that needs to get done to fully discharge the contract.

 

Closings can be formal, with all interested parties tegether on the room, or the clsing can be done by an escrow agent as in more frequently done on the west coast. The work to be done is the same. The work falls into six areas:

 

 

-Creation of File: The particular office will have its own particular requirements for opening a new file, identifying the client, doing a conflict, search, etc.,

-Information Gathering: Typically start with a real estate contract and a loan committment. From the contract, develop a checklist of the additional information needed to complete the closing. Critically, notice the expected closing date in the contract.and reconcile it, if necessary, with the loan committment. If the contract does not have a legal description of the property, obtain a description elsewhere as the information willl be critical throughout.

-Document preparations: Deed, mortgages, deeds of trust, security deeds, mortgage releases, lien releases, leases, releases, and the like

-Closing: Receiving the purchase price and transferring possession and title

-Disbursement, recording and delivery of the closing documents

-Close out. Closing the office file. As with opening a file, the particular office will have its own requirements



 

Review the Contract: Contacts: seller, purchaser, broker (Get their names, addresses, phone numbers)

 


Ordering title exam: Order it early. Strike a balance between having the examination early, thereby permitting lots of time to correct problems, and getting the exam close to the actual closing, so as to reduce the chances of encumbrances being placed of record after the exam but before the closing. Perhaps, get an exam, and an update. The title examiner needs, as a minimum, the name of the current owner and a legal description. Any additional information is a help

 


Ordering survey: Usually, the survey is an "as built" survey, showing improvements, setbacks, easements actually located on the land. As a minimum, the surveyor needs a legal description of the land. and any information about previous surveys. The survey should indicate if the property is in a flood hazard zone. If the lender has any special requirements, the surveyor needs to be informed. Order several copies of the survey, and get a bill for the survey so it can be paid at closing.

 


Ordering hazard and fire insurance: proof of insurance needs to be shown at closing so that the lender is secure. The fire and hazard insurance should name the lender as a loss payee, or indicated as the mortgagee on the insurance policy. Most lenders require a one year contract fully paid up at the time of the closing. Frequently home lenders will want to include payments for the insurance and taxes into an escrow account, with one check written by the new homeowner each month. There may also be a requirement for flood insurance. When ordering the policies, the insurance agents need to be informed of the date set for closing, with coverage to begin, at the latest, on that date.

 


Termite clearance letter: These are usually best obtained before the closing, if the contract provides for a termite inspection or bond.

 

Review title exam: check for objections, and matters to be paid on closing.

 

Satisfaction of loans and liens: arrange for loans to be paid at closing and for satisfaction documents to either be presented at closing for recorded thereafter. You can arrange for this by phone.

Words and Phrases to Know:
formal closing, escrow closing, loan committment, deed, mortgage, security deed, deed of trust, lien, title exam