CLOSINGS

The Settlement Process
Once an agreement in principle has been made by the buyer and seller regarding the purchase of property, a signed contract is written up detailing the specifics of the transaction. Among other things, the contract specifies what is being sold, the purchase price, when the settlement will take place, how the property is to be conveyed (e.g. special warranty deed or general warranty deed), and how taxes and assessments will be pro-rated, or split between the buyer and seller.

Part of the contract states that the property will be conveyed with good and marketable title, which is where the title agency/settlement company comes in. A title search verifies that the seller owns the property and has the ability to convey it. It also locates liens that exist on the property that need to be paid off (e.g. mortgages, judgments and tax liens) and what, if any, encumbrances exist. Certifications and lien letters are requested from the various taxing authorities and municipalities to determine the status of current and prior taxes and assure that there are no un-filed municipal claims. After compiling the information, a preliminary opinion is submitted to the title insurance company. It, in turn, issues a title commitment, which is a promise to issue a policy protecting the buyer provided the premium is paid and conditions of the commitment are complied with (such as paying off existing liens). The commitment also lists exceptions, which are items that are not covered under the title insurance policy like easements for utility lines.

Meanwhile the title agent works with the lending bank or mortgage company providing it with the information it needs for its underwriting process (such as a copy of the title commitment and tax bills). Payoffs are ordered for the seller's mortgage and the information required to prepare the Closing Disclosure is gathered – outlining all of the costs associated with the closing for both buyer and seller.

Upon closing, the property will be transferred from the seller to the buyer. Your attorney goes over all the mortgage documents to make sure they are properly executed and notarized. He also makes sure the seller has signed the deed and other affidavits that are required. He collects all incoming money (typically from you and your lender) updates the title search, records the documents, pays off all the liens and other closing costs, and finally, ensures that all prior mortgages get cancelled in a timely fashion.

Closing Reconciliation
Because most lenders and title insurance companies insist that an updated title search and its filing be accomplished prior to the disbursement of funds, real estate agents and the seller may not be paid at closing. (Rosner Settlement Services makes every effort to record the documents the same day whenever possible.)

An additional impediment to immediate payment may result from the type of funds brought to closing to pay the seller, existing lien-holders and other closing costs. Normally, checks or wires from the buyer and the lender (and, in some cases, the real estate agent or even seller) are deposited into a trust account. All funds brought to closing must be certified funds. However, even in the case of certified funds, there may still be a one or two day period where the funds are not considered collected. Therefore, it is preferable that all amounts over $5,000.00 be wired to our trust account (Rosner Settlement Services encourages lenders to always wire funds which are considered collected immediately.)