The Closing Process

What Is The “Closing”?
The final step in the purchase and sale of the home is generally referred to in the real estate contract as the “settlement” or “closing.” There are actually two closings involved in any standard residential transaction. These will usually happen simultaneously. The first closing is the closing of the sale from the seller to the buyer, which involves the transfer of the title by deed. At the same time, the seller delivers the keys, transferring possession of the house to the buyer. The second closing is the loan closing. This is the closing of the loan between the buyer and the lender. The seller has no involvement in this particular part of the transaction. It is often done without the presence of the seller.

The Mechanics of Closing
The mechanics of the closing may appear to be confusing, but they are very well coordinated. Financial statements, called closing or settlement statements, are prepared by the title company. These statements set forth in detail the closing costs to be paid, who pays each cost, and how the cost has been prorated. In residential transactions, the buyer is required to use a federal closing statement form called a HUD-1 Settlement Statement. Both the seller and buyer will be required to read and sign these closing statements.

At settlement, the closing officer will explain to you all of the statement papers. These documents include (1) the deed, (2) the note which evidences the loan, (3) the deed of trust/mortgage which secures payment of the loan, (4) the settlement statements by which an accounting is made of the transaction, (5) the truth in lending statement by which the lending institution discloses all of the finance charges, (6) the survey of the property and (7) any other documents required by the lending institution or by the particular requirements of that settlement.

At settlement, the documents will be signed by the proper parties, and several of them will require notarization. The settling of the financial arrangements among the buyers, sellers, lender, real estate agents and others will be explained by the closing agent and the transaction will be completed.

It is at settlement that the lender’s fees, recording fees, real estate commissions and all other fees agreed to in either the contract or the finance documents will be paid. It is required that the purchasers bring to settlement the balance of the down payment and required closing costs by certified or cashier’s check or wired funds. Purchasers should call the settlement office a few hours before settlement for the exact amount of funds required for settlement.

As a general rule, the originals of the deed and any deeds of trust delivered at closing will be sent or hand delivered by the title company to the County Clerk for recording. The title company will issue a commitment for title insurance before closing, and prepare the actual policy after the documents delivered at closing are recorded. Actual delivery of the owner’s title insurance policy will not occur until a few months after the closing.

After Closing
After the settlement is completed, the recording documents (deed, deeds of trust, powers of attorney etc.) are sent to the Courthouse in the jurisdiction where the property is located. At this point a final “bring-down” title search is completed and the documents are admitted to record. After the documents are recorded, Shamrock Title, LLC disburses funds to all appropriate parties. Although the Deed is recorded after the closings, the responsible governmental entity may take a number of months before it returns the deed.

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