Real Estate Closing Process for a Purchase Transaction

Buying a home is a thrilling experience. You search for a home through websites or by the help of your real estate agent. Once you have located your dream home, you make an offer to the seller. Once they accept your offer, an agreement of purchase and sale is drafted and signed by you as well as your seller. A down payment is also made by the buyer at that point. Buyer’s lawyer or their agent or seller’s lawyer holds onto it until closing. After that you are only one step away from becoming the registered owner of the property. The last step is the real estate closing. By keeping the following information in your mind you can have a smooth and efficient closing.

Title Search and Requisitions

Your real estate lawyer conducts a title search on the subject property. A title search involves the examination of public records and other documentation to ensure that a property is good to be sold and its title is free of any claims, liens, or other issues that could prevent you from legally owning the property. Date of title search is mentioned on the agreement of purchase and sale. Your real estate lawyer has to conduct the title search before the requisitions date for it to have any worth.

If there are any defects in the title, your lawyer will requisition them. After carefully examining the title your lawyer prepares a letter of requisitions and forwards it to the seller’s lawyer. The most common issues with the title that are added in the requisitions are registered charge(s), restrictions on the land, liens, judgments and work orders. It is the responsibility of the seller and their real estate lawyer to resolve these issues and provide a clean title on closing.

Title Insurance

Title insurance protects you and your lender from financial loss sustained from defects on title to a property. Major defects in the property are liens, encumbrances, easements and right of way. Your real estate lawyer orders the title insurance policy for both you and your lender. Premium for title insurance policy is paid by the buyer.

Mortgage

When buyers go to lenders they assess their financial condition by examining some factors such as credit score, income and employment history, debt-to-income ratio, down payment and liquid assets. Once you qualify your lender instructs your mortgage to your lawyer. Your lawyer then reviews the documents and explains them to you. After you sign the documents these documents are submitted to your lender.

Once your lender has received a signed copy of the documents and all conditions are satisfied, they will transfer funds into your lawyer’s trust account. Your lawyer then uses these funds to complete the purchase of your house.