Real Estate Closing Checklist Part II: The Closing

The actual real estate closing occurs when the Buyer and Sell come together to exchange documents and money and when the Buyer  officially becomes the new owner of the real estate.  Though this is a rather simplified summation of the closing, in truth there are a number of requirements for both the Buyer and Seller to meet in order for the transaction to be  complete. 

Buyer:  Your closing typically will take between 1 and 1.5 hours.  This all depends on whether you are taking a mortgage or are paying cash at the closing.  If you are taking a mortgage you will be required to sign a number of important bank documents in order to secure the loan. These documents include among many others the

-Promissory Note: This is the document outlining your promise to pay the lender the amount you are borrowing to purchase the real estate.  The amount of the loan, interest rate and term of the loan are outlined here.

-Mortgage Deed :  This document reflects the terms of the Note and the responsibility of the borrower.  The Mortgage Deed gives the lender the home you are purchasing as collateral for your promise to pay the Note. The Mortgage Deed is typically recorded on the local land records so that the mortgage becomes public record and so that the real estate can not be conveyed (sold) until the mortgage has been released (payed off).

-RESPA/HUD-1:  This form outlines very specifically all of the financial aspects of the transaction and accounts for every penny of the transaction. This document includes both the Buyer and Seller information.

-Title Search and Insurance:  A title search will be preformed by the Buyers Attorney and is important in identifying the specific legal details of the real estate and what if any encumbrances are recorded on the land records.  The encumbrances typically found are mortgages that must be released by the Seller before the closing.  Additionally, the Buyers lender will require a Title Insurance Policy be purchased by the Buyer in order to protect the lender if a future title issue where to arise.  Though not required it is also a very good idea that the Buyer purchase their own policy to protect their interest. The Title Insurance is available through your attorney.

Sellers:   The Sellers portion of the closing should not take nearly as long as the Buyers because there are not nearly as many documents for the Seller to sign, this usually last around half of an hour.  Traditionally, the Seller and their attorney will arrive at the Buyers attorneys office for the closing.  The Seller is responsible for:

-Deed:  This is the bill of sale for the real estate. Signed by the Seller it contains the legal  description of the property.  The most common form of deed used in Connecticut is the Warranty Deed.  This form of deed transfers the real estate to the Buyers free of and encumbrances.

- Conveyance Tax Return: Connecticut charges a conveyance tax (sales tax) on the sale of real estate.  This tax is paid by the Seller typically from the proceeds of the sale of the real estate.  A return which includes the tax ID numbers of both parties is filed by the Seller when the Deed is recorded in the land records.

-Payoffs and Encumbrances: The Seller is responsible for paying-off all loans or encumbrances attached to the property and recorded on the land records. These will be identified by the title search done for the Buyer.

Our firm represents many clients in both residential and commercial real estate transactions. This is a general outline of the important closing elements. Please feel free to call our office for more information on how we can assist you with your upcoming real estate purchase or sale.

Comments

[lex]

thanks, very helpful post

[John Beck]

Banks need to focus on credit risk before giving loans to the individuals , in oreder to bring less gaps between assets and liabilities .

[Tax Foreclosures]

Real estate remain the global importance with growing competition and growing challenges .