LEGAL TALK by Phyllis Oeser

 

 

“The Closing” — what’s that?

In our last article we discussed your decision as to whether to close the real estate sale or transaction at a title company. As we discussed, if the buyer is borrowing money from a bank or mortgage company then you will be required to close the matter at a title company.

At the beginning of the any discussion of buying or selling a property, everyone will discuss what will be required for the closing and when the closing will occur. Exactly what is “the closing?” The closing is the meeting at the title company or the attorney’s office where all of the parties attend to sign the documents and to collect and disburse the funds.

At the closing there will be numerous documents to be signed by the buyer and the seller. In the following discussion, we will assume the property is being financed by the seller.

The seller will sign a General or Special Warranty Deed that conveys their interest in the property to the buyer. The buyer will sign a Deed of Trust and Promissory Note. The Deed of Trust is the document that is filed of record to put the world on notice that the seller has a lien against the property in the amount of the loan to the buyer. The Deed of Trust allows the seller to foreclose and take the property back if the buyer fails to timely make his or her payments, fails to maintain insurance, to maintain the property in good condition or fails to timely pay the taxes. The Deed of Trust also provides the requirements to foreclose and other duties of the buyer and seller.

The Promissory Note is signed by the buyer and is the document that states the amount of the loan, the interest rate, the length of the loan, the monthly payment, the amount of the monthly and late payment.

There will be many other documents for the buyer and seller to sign, such as the document showing the disbursement of funds, disclaimers and disclosures.

If the buyer or seller is unavailable or unable to attend on the date and time scheduled for the closing, the documents can be sent to the buyer or seller to execute before a notary. Once all of the documents have been signed, the General or Special Warranty Deed and Deed of Trust will be filed in the real property records of the county where the property is located.

When the closing is completed, the buyer will be the new owner and the seller will be in the same position as a bank or mortgage company. In the next article we will discuss the responsibilities and duties of their new roles.

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