What is a Residential Real Estate Closing?
A real estate closing – also known as a "settlement" –
is the point in time at which the title to the property is transferred
from the seller to the buyer. If the buyer is financing the purchase,
this is also the time the mortgage will be given to the lender. A closing
agent acts as a clearing house for the parties' funds and information
necessary to close the transaction.
When Should I Contact a Sarasota
Real Estate Attorney?
Once the buyer is ready to make an offer to the seller and the realtor
has prepared a form contract to make the purchase offer, it is at that
time that you should contact a real estate attorney. Whether you are the
buyer or the seller, it is very important that you communicate with your
real estate lawyer before signing the contract as he or she can add provisions
to protect you in the transaction.
The Closing Process
Once the contract has been reviewed and/or revised by your real estate
attorney and terms have been agreed upon, the seller and buyer enter into
a written purchase contract. At that time, a closing agent (who is often
a real estate attorney) is selected to handle the closing process. The
buyer then provides an "earnest money deposit" which is given
to the closing agent to be promptly deposited into an escrow account where
the funds are held until closing. Next, a request for preliminary title
work will be submitted. This search is done to compile a list of requirements
to be satisfied before ownership of the property can be transferred (i.e.
payoff an outstanding mortgage, payment property taxes, or a lien against
the property). The closing agent prepares the deed and other documents
to be signed by the parties and when all of information relating to the
transaction is obtained, prepares the HUD –or "settlement statement".
This document outlines all the costs for both the buyer and seller associated
with the closing. On closing day, the seller signs and delivers the deed
to the buyer and the HUD will be signed by both parties. Ownership of
the property will then be transferred from the seller to the buyer.
What are the benefits of using a Sarasota Real Estate Lawyer for Residential Closings?
Buying a home is one of the most exciting commitments one makes in their
life. It is also typically one of the largest and most significant purchases
you will make. The closing is the most important part of the transaction.
A new loan is established, a mortgage balance is paid off from the proceeds
of the sale, the deed and closing papers are prepared, and the title of
the property conveys. Hiring a real estate lawyer can ensure all these
documents are properly prepared, appropriately executed and help you avoid
common problems with a home purchase or sale.
Even though most real estate transactions use a standard form contract,
a real estate lawyer can properly explain the documents and make changes
that reflect the best interest of the buyer and/or seller. A real estate
attorney has the knowledge and experience to address issues in the purchase
agreement including but not limited to:
- What are the legal consequences if the closing does not take place?
- What happens if the inspection returns with findings of defects, lead-based
paint, asbestos or termites?
- What the seller has failed to disclose defects in the property?
- If the seller has altered the property in any way, were the changes properly
permitted and approved?
Mortgage loan commitments and mortgage loan documents are complex and many
buyers finance a substantial portion of the purchase price. An experienced
real estate attorney can review and explain these important documents
to the buyer at the closing.
Once the title search is performed, a real estate attorney can review the
requirements of the title commitment and can verify that the legal description
is correct, determine if there are any problems with adjoining owners
or prior owners, and explain title exceptions. The attorney can also determine
whether or not there are any legal restrictions that would impair the
seller from selling the property, explain the effect of easements or restrictions
imposed by a previous owner and ensure the title meets a financial institution's
The closing process can be complex and confusing. The most important reason
to be represented by a real estate attorney is the possibility of conflicting
interests of parties; not only with the buyers and sellers but at times,
the professionals involved can be at odds with one another. A real estate
lawyer will provide legal counsel to serve their clients' best interest.
Your rights could be at risk if you proceed to closing without a Sarasota
real estate lawyer.