Congratulations! You’ve given an offer, the seller has accepted, and you are one step closer to buying your house or land. What is the closing process now that you have a signed Contract for the sale and purchase of the property?
1. First, the parties will need to “escrow” the Contract with an escrow agent. If a real estate agent is involved, the agent normally takes care of escrowing the Contract. Typically, attorneys and/or title companies act as an escrow agent for the parties. The escrow agent will either open a file or cause a title commitment to be ordered from a local title company (if the escrow agent is not a title company). You will also deposit your earnest money with the escrow agent. Typically, this is applied later to the amount of closing costs/down payment which you will be required to bring to the closing.
2. During the title search process in order to produce at title commitment, a title company makes sure that the property the seller is offering is capable of being sold. This means the title company will look through public records for a variety of things including mortgages, divorce settlements, deeds, liens, easements, other encumbrances, probate records and more to verify the legal owner. The buyer will be provided a Title Commitment which will provide the company’s results of the title search, including, who is the current owner of the land; all adverse matters filed against and affecting the property; and what items must be “cured” before closing in order for the company to be able to issue a title insurance policy. For more information on Title Insurance, see our Article “Are you covered? Title Insurance.”
3. The buyer should conduct “due diligence” after the Contract has been signed. This diligence may include a home and pest inspection, a survey of the property, and an environmental study, if necessary. If the diligence shows something is wrong with the property, the buyer will have to decide whether to contact the seller or not. For example, a squeaky hinge is an easy fix but something much larger may need to be addressed with the seller. If the survey and/or title commitment shows unknown conditions covering the real property such as liens, right of ways, easements, boundary line issues, then the buyer will need to immediately object to such items and notify the seller in writing per the terms of the Contract. All matters affecting the title which are shown on the title commitment and/or survey should be cleared up before closing or waived by the buyer before closing.
4. Any contingencies on the transaction should then be completed. These contingencies will include the finality of any repairs; curing any Buyer’s timely objections to the condition of the title of the property or survey; as well as making sure the financing has been secured at an acceptable rate. Most of the time these contingencies need to be taken care of by a certain date as provided in the Contract but can be more flexible depending on the terms of the Contract.
5. Then, at least 24 hours before the closing date, it is always a good idea for the buyer to do a walk-through. It is best to schedule the walk-through for as late as possible in order to make sure you see the home in the condition it will be in when you move in.
6. Last but not least, the buyer and seller will sign the closing documents. All parties should carefully read and review the closing documents before signing the documents to make sure the documents properly reflect the Contract and any agreed upon terms with the Lender.
7. The escrow agent will then provide fully signed copies of the closing documents to the appropriate parties and file the necessary documents showing the sale, purchase, and loan in the real estate records of the county in which the property is located.
– The Business Team
Scott | Josh | Jeremy
The Allen Firm, PC 181 S. Graham Street | Stephenville, Texas 76401 Ph: 254.965.3185 | Fax: 254.965.6539