Closing (real estate)
|This article does not cite any references or sources. (December 2009)|
The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, the parties consummate the purchase contract, and ownership of the property is transferred to the buyer. In most jurisdictions ownership is officially transferred when a deed from the seller is delivered to the buyer. Lenders providing a mortgage loan will often require title service, including title search and title insurance, appraisal, land survey, and attorneys to be involved.
Several things happen during closing:
- The buyer and/or his/her lender delivers a cheque (generally in the US, a Cashier's check or wire transfer) for the balance owed on the purchase price.
- The seller signs the deed over to the buyer and gives it to the buyer. A recorder's office which would record the deed commonly requires the seller's signature to be notarized. If applicable, a mortgage will also be recorded.
- Commonly, the seller delivers possession to the buyer, typically by giving the buyer keys for any buildings or apartment. Unless otherwise specified in the real estate contract, delivery of possession should be by default at the closing, but the contract may specify a different time.
- A title company, lawyer, civil law notary, or the buyer registers the new deed with the local land registry office or recorder's office. A Declaration or Statement by buyer or seller regarding purchase price may have to be filed with the government. Conveyancing taxes and recorder's fee will typically have to be paid, which are part of the closing costs.
- The seller receives a cheque or bank transfer for the proceeds of the sale, less closing costs and mortgage payouts.
- From the funds allotted for closing costs, prepayments for real estate taxes and insurance may be required, and fees charged by other parties may be paid, such as real estate brokers/agents, title companies, lawyers, etc.
Closing in escrow usually occurs in states in the western half of the US. A title company (rather than a lawyer) or other trusted party holds the money and the signed deed, and arranges for the transfer. This is primarily so that the seller can give up ownership of the property, and the buyer can hand over the payment, without both parties having to be present at the same time. Escrow ensures an orderly transaction, or if something goes wrong, an orderly termination of the agreement.
On the Eastern side of the US, settlement (as closing is called) takes place on a specified date and time during which all parties (usually including the agents involved) meet at a settlement company presided over or supervised by a lawyer or settlement agent. At that time, the settlement agent disburses all funds listed on the settlement statement (in form of certified or wired funds) and the property exchange takes place, and the deed is then recorded by the company.