The Basic Steps at Closing
Closing the real estate transaction is basically the investigation made or actions taken by either a title agent or title attorney before the actual issuance of the title policy. There are five basic steps that usually followed in somewhat the same order in every real estate transaction. Although it is not the job of the title agent or title attorney to cure defects in or problems with the title to the property or perform escrow or other services outside of closing the transaction, title agents and title attorney help in these matters on a somewhat regular basis.
Starting the process
A sales contract is signed by the buyer and seller
and delivered to the closing agent, usually with a deposit check. The escrow is
accepted by the escrow agent, usually by written notation on the contract. The
escrow agent starts the closing process by opening a title order. The file
begins to be processed. Tax information, loan payoffs, survey (if necessary),
homeowner/maintenance fees, inspections/reports, and hazard and other
insurances as well as legal papers are ordered. A
title search is ordered.
Title search and
examination
This is a search made of the public records.
Records searched include deeds, mortgages, paving assessments, liens, wills,
divorce settlements and other documents affecting title to the property. Title
examination is the examination of the documents found during the title search
that affect the title to the property. This is when verification of the legal
owner is made and the debts owed against the property are determined. Upon completion
of the search and examination, a title commitment/preliminary report is
prepared and reviewed and sent out to interested parties.
Document preparation and/or
request to produce
The closing agent reviews the new lender's
instructions/requirements, reviews instructions from other parties to the
transaction, reviews legal and loan documents, assembles charges, and prepares
closing statements and schedules the closing.
Settlement/closing the
transaction
Escrow/settlement agent oversees closing of the
transaction. Seller signs the deed and closing affidavit. Buyer signs the new
note and mortgage. The old loan is paid off. Seller, real estate professionals,
attorneys and other parties present at the closing of the transaction are paid.
Post-closing
After the signing has been completed, the
escrow/settlement agent will forward payment to any prior lender, and pay all
parties who performed services in connection with your closing (if they have
not been paid). The transaction documents are recorded in the county in which
the property is located. Title insurance policies are prepared and sent to the
new lender and to you. This all happens without any further actions by the
buyer or seller.
