Buying a home is an exciting experience, but one that is also very stressful. There are a myriad of details to handle, such as selling an existing home and obtaining financing. Once your loan has been approved, moreover, getting to the closing table can also be a challenge. Ultimately, an experienced real estate attorney can help to ensure the loan closing goes smoothly. In the meantime, this article is a discussion of an attorney’s role in a real estate settlement.
Real Estate Closing 101
A real estate closing is referred to as a settlement because it is the final performance of the agreements among the parties (i.e., the seller, the buyer and the lender) and the financing of the home purchase. Even before a closing is scheduled, it is crucial to have an experienced real estate attorney perform a title search.
This will ensure the property is free of any liens, judgments or other encumbrances and that the seller has a right to sell it. Any judgments or liens must be paid prior to the closing, which can delay the process. Not only is this an annoyance, delays may pose problems if you are selling an existing home or need to vacate an apartment. Once the loan is ready , your attorney can assist with matters such as explaining the closing process, reviewing the closing documents, and calculating the funds needed to to close the deal.
A real estate settlement is essentially a simultaneous exchange of necessary documents and funds. The buyer pays the seller through a combination his or her own funds and the loan proceeds (in addition to the down payment), while the seller provides the buyer with a deed and clear title to the property. The buyer receives the funds from the lender and signs a promissory note to repay the loan. The buyer and seller also pay the attorney’s fees, title fees and notary fees. Often, as an inducement, a real estate deal involves a “seller’s concession,” whereby the seller agrees to pay part, or all of the buyer’s closing costs.
After the loan closing, the buyer becomes the property owner and can take possession immediately or shortly after the closing, unless the parties agree on an alternative date. In addition, other post-closing agreements may need to be resolved. This includes reimbursements for real property taxes (when the precise amounts due were unknown at the closing) or repairs that could not be made prior to the closing.
While the real estate settlement process seems straightforward, closing on a home can be a lengthy and complicated process. In order to ensure that the closing goes smoothly, and to best protect your interests, it’s a good idea to enlist the services of an experienced real estate attorney.