Real Estate Closing Process
Closing is the final step in a real estate transaction. At the closing, official documents are signed, money changes hands, and ownership of the property officially passes from seller to buyer. This might sound like a simple process, but it is only because a lot of work went into getting the parties to this final moment. Numerous moving parts come together at the closing, also known as settlement, and if everything is not in the right place, then the transaction itself can fall apart. Closing is a required step in the transaction, and in many ways, it is the most crucial. You don’t want to walk into a closing unprepared or without every step complete, or else you are likely to encounter some problem that delays the conclusion of the transaction or even derails it altogether.
At Higgins Land Title Solutions, LLC (“HLTS”), you have the benefit of a full-service title and escrow company run by seasoned closing professionals. We conduct closing and settlement services throughout Kentucky and Indiana. A qualified professional will attend your closing whether it be at our offices or via mobile closing. Trust HLTS as your closing specialist for all your settlement services.
Steps in the Real Estate Closing Process
Closing, or settlement, occurs on a given day at an appointed time, but a lot of work beforehand goes into making that closing date successful. The process starts when a real estate sales contract is signed between the buyer and the seller. The buyer provides an earnest money deposit at this time as a good faith showing that the buyer is truly committed to seeing the contract through to the end. Buyers who back out of the contract without good cause lose their earnest money to the seller, which typically amounts to several thousand dollars. If the contract does go through, the earnest money goes toward the down payment.
Once signed, the contract and the earnest money deposit are delivered to the title company, which acts as the closing agent, to start the closing process. The title company creates an escrow account to hold the earnest money or places the money with an escrow company and also orders a title search. Other documents and services are ordered as necessary, such as inspections, loan information, tax information, HOA fees, or other matters specific to the property.
The next crucial step in the process is the title search. This is where the title company examines all documents and records related to the chain of title to verify the legal owner of the property and any encumbrances on the property, such as mortgages, liens, boundary disputes, easements, or other parties who might have an interest in the property. If there are any clouds on the title, they will need to be resolved before closing in order to deliver clear title. An attorney may be needed to help clear the title through legal means, such as by litigating disputes, negotiating settlements, or obtaining quitclaim deeds. Having an experienced real estate attorney standing behind the title company is one of the benefits of using HLTS, so you know any legal issues with the property will be diligently searched and spotted.
Once all required inspections and appraisals have been conducted and financing has been arranged, the title company will receive copies of all documents, reports, and instructions from the lender. With all of this information in hand, the title company prepares a closing statement and schedules a time and day for the closing. The closing statement or disclosure document will identify the terms of the loan, estimated monthly payment, and all closing costs due at closing. This document is provided to the parties several days before closing so they have time to review it with their lawyer, broker or the title company and get answers to any questions they have.
On closing day, the buyer and seller will come together with the closing agent to complete the transaction, which involves signing lots of documents in the presence of a notary. The buyer will tender a check for the amount owed on the down payment (less the earnest money deposit) and any closing costs owed by the buyer. This is usually done with a cashier’s check or wire transfer. The buyer signs the note that describes the terms of the mortgage as well as a deed of trust, which is a legal document that serves to designate the property as collateral on the mortgage. The old loan gets paid off, and the seller signs the deed over to the buyer, which officially transfers ownership of the property. The seller hands over keys to the property at this time as well.
After closing, the title company or escrow agent will see that the previous lender receives any payment due and that any other parties are paid out of the closing costs. The title company will prepare a title insurance policy and deliver it to the buyer and their lender.
Call HLTS for Help With Real Estate Closings in Kentucky and Indiana
The closing date is often a tense time for the buyer and seller, as it is the culmination of a long process and concludes a very significant monetary transaction. The parties are likely nervous that something could go wrong, like a document was overlooked or a previously undisclosed issue arises. However, if all the work leading up to the closing date was completed diligently and efficiently, then there should be no problem, and the closing should conclude smoothly and successfully. This is always our goal at HLTS. Call us today for help with your real estate transaction in Kentucky or Indiana.