A “closing” is a meeting to exchange information, documents and funds in order to complete the transfer of real property. In most transfers, (where the buyer needs to borrow money in order to buy the house), two closings actually occur simultaneously. One is a closing or completion of the buyer’s loan. This is a transaction between the buyer and the buyer’s lender, for the purpose of funding the purchase. The loan closing is necessary in order to proceed with the other closing, which is the closing or completion of the transfer of title from the seller to the buyer.
A closing provides a definite time and place for the transfer of the property to occur. In today’s world of advanced technology and communication, a closing is probably not essential in that the necessary information, documentation and funds are capable of being exchanged without the need for a meeting. In certain cases, closings are in fact handled “through the mail”. However, most transfers are completed at a closing simply because the lender requires one. Fortunately, a closing rarely results in unnecessary expense, since the tasks accomplished at closing are necessary to complete the transfer and would have to be accomplished at another time and place if not at the closing.
Because you agreed to do so as a condition of borrowing money from the bank. This is one of many services rendered by the bank attorney in connection with your loan. Although the bank attorney does not represent you, this is simply another charge or closing cost, which the bank passes along to you, the customer, in order to loan you the money.
Typically, sellers do not need to attend closing. Sellers often sign the necessary papers before the closing, which are then delivered to the closing by their attorney. Buyers, on the other hand, typically need to attend the closing since the lender requires them to be present to sign all of the mortgage lending documents at that time.
Sellers can usually be represented by their attorney at the closing. Buyers must usually appear personally, but should be accompanied by their attorney. On rare occasions, under unusual circumstances, lenders may permit the closing to be attended by the buyer’s agent pursuant to a Power of Attorney. This must be authorized by the lender in advance and may create additional difficulties.
Typically, when everything is in order, the buyer’s attorney will schedule the closing. Usually, however, the specific closing date and time is dictated, in large part, by the availability of the lender’s attorneys.
Possibly, but not necessarily. The contract closing date is a target date. As such, the closing does not usually fall precisely on that date. Many things must be prepared and obtained by the seller, the buyer and the lender before a closing can be scheduled. Once all of these closing requirements have been met, a closing can be scheduled. If at all possible, the specific date and time of the closing is scheduled to accommodate the schedules of those who will need to attend. However, various deadlines, difficulties and/or other uncontrollable factors may require the closing to be scheduled at a time that is not completely convenient for everyone.
You will be notified as far in advance as possible. Unfortunately, due to the fact that many people want or need their transfer to take place as soon as it is ready to close, the advanced notice can be as little as a day or two.
“Closing costs” are all of the expenses incurred, over and above the purchase price, in connection with closing. The buyer and the seller are each responsible for various closing costs associated with the transfer. Although your attorney will notify you of many of these costs, please be aware that your attorney has no control over a majority of these charges. Most of them are charged by the government, surveyors, abstract companies, real estate agents or, in the case of a buyer, by the buyer’s lender. The responsibility for payment of these charges is established either by law or by your contractual agreements.
“Closing adjustments” are credits or debits to either party to allocate responsibility for expenses already paid or to be paid. Property taxes are an expense that typically needs to be “adjusted” at closing. For example, if the seller has paid a full year of property taxes but sells the house to the buyer only five months after the taxes were paid, the seller received only five months of benefit from the payment of these taxes and the buyer will be getting the remaining seven months of benefit. Therefore, this payment is “adjusted” at closing by the buyer reimbursing the seller for 7/12ths of the yearly payment, which represents the seven months of taxes that were paid by the seller for the buyer’s benefit.
Since each transaction is unique, it is best to discuss any questions you may have regarding fees with your attorney. Since most real estate transactions have the same basic elements in common, we are typically in a position to charge a fixed fee for those services, which can be determined at the outset. However, circumstances may arise which require special attention not contemplated in our basic fee. Under such circumstances, it may be necessary for us to charge a supplemental fee for the additional legal services which are required. Any such fee would be based upon the additional amount of time and effort expended on your behalf. Buyers should take note that the fees charged to you by our firm are solely for our representation of your interests. If you are obtaining a bank loan, an additional attorney’s fee will be charged by your lender to pay for an attorney to represent their interests. Although you are required by your lender to pay these fees, in order for the bank to agree to loan you their money, the bank attorneys do not represent you. Their sole obligation and responsibility is to the bank.
A “Good Faith Estimate” is just that—an “estimate” of your closing costs and adjustments, made by your lender in “good faith” and to the best of its ability. This estimate is made at a very early stage and is based upon various assumptions that are not in the control of your lender. Consequently, some of the figures in the Good Faith Estimate may not be accurate.
Once the closing is scheduled, we will calculate all of your adjustments and determine all of your closing costs and expenses, including those expenses charged by your lender. We will then advise you of the sum total you will need in order to close the transaction.
Closing costs and expenses cannot be calculated until the buyer’s lender provides certain figures which are not available until the closing date is set. As such, it is impossible to provide you with your actual closing figures until after the closing has been scheduled. We make every attempt to calculate your closing costs and expenses promptly upon the scheduling of your closing, so that we may provide you with your closing figures as soon as possible. Unfortunately, due to the fashion in which the closing date is scheduled (as discussed above), on occasion there is little advance notice of these figures.
The amount of money required to close is determined, at least in part, by the closing expenses and adjustments. These figures are calculated based upon the closing date and, therefore, cannot be calculated until the closing has been scheduled. Unfortunately, on occasion this allows us to provide you with very little advanced notice of the exact amount required. As the time for closing approaches, however, it may be possible to provide you with an approximation of the amount of funds which will be necessary for closing. Hopefully, this will assist you in making any preliminary plans for the transfer of funds in anticipation of determining the actual figures.
It is usually necessary for you to bring only one certified check, in an amount sufficient to cover all of your costs and expenses. We will deposit your check into our trust account and we will write all of the individual checks necessary to pay your costs and expenses associated with the closing. Occasionally, specific circumstances require different arrangement to be made. If this should occur, this will be discussed with you prior to closing.
The requirement to provide certified funds is not an issue of trust. We are legally and ethically prohibited from writing checks from our trust account unless the funds to back those checks are on deposit in our trust account. We are not permitted to write checks on your behalf using any funds other than those belonging to you. If you were to bring us a personal check, the check will not clear for several days and, as such, your funds will not be on deposit in our trust account when we are writing our checks on your behalf. However, certified funds do not need to clear and are immediately available to be used upon deposit. We are therefore able to deposit your certified check and immediately write the checks necessary to close your transfer.
Depending on the urgency of completing the closing, it may be possible to simply delay the closing of your purchase until you are prepared to close on your sale. If this is not possible, you can apply for a bridge loan. This is a temporary, short-term loan that provides you with the funds necessary to close on your purchase and which is later paid off with the proceeds upon the sale of your home.
Again, depending on the urgency of completing the closing, it may be possible to simply delay the closing of your sale until you are prepared to close on your purchase. If this is not possible, it is not unusual to reach an agreement with either the buyer of your home or the seller of the home you are purchasing, to allow you to either stay in your home following closing, or move into your new home before closing. Any such agreement should be discussed with your attorney and put into writing, as discussed earlier. If such an agreement cannot be reached, you may need to make other temporary living arrangements until your purchase closes.
If these items are included in the purchase and sale contract as part of the purchase price, no additional payment is required. If these items are part of a “side” agreement, they can be paid for at closing or at any time following closing. It is often most convenient to make arrangements for doing so at closing.
Although you are certainly entitled to do so, the documents are typically long and technical. Consequently, most people prefer not to read them. Your attorney has reviewed documents of this nature many times, is aware of their content and purpose and is aware of what to look for that might be of concern or importance to you. Most people choose to rely on the experience and expertise of their attorney to review the closing papers, explain their purpose, and address any questions or concerns that might be appropriate.
Once you accept your mortgage commitment, notify your insurance agent that you intend to purchase a new home. Your agent will usually request a copy of your mortgage commitment, since it sets forth certain information regarding your lender’s requirements for your insurance. Your insurance agent will prepare your policy and provide you with the documents you will need in order to close. Be prepared to pay a full year of your insurance premium to your agent when you have the policy prepared. Your mortgage lender will not allow the closing to be scheduled without this insurance in place and proof that this has been done.
Yes. It is important that you do a “walk through” of the property to make certain that the property is in substantially the same condition as when you submitted your purchase offer. Once you have closed, you are deemed to have accepted the property in its present condition (except for matters which were misrepresented to you by the seller). Therefore, you must raise any objections prior to closing. If you discover any problems during this inspection, contact your real estate agent and attorney immediately.
It is usually your obligation to do so pursuant to the terms of your contract. This permits the buyer to determine that the property is in substantially the same condition as when the purchase offer was made.
The real estate agents can assist in scheduling this inspection. If you are not working with real estate agents, the buyer can arrange this through his/her attorneys or directly with the seller.
You are not responsible for any changes that are the result of “ordinary wear and tear” or deterioration under normal usage. Anything else, however, regardless of how minor, would in fact be the seller’s responsibility until the transfer of title to the buyer.
Contact your attorney. If the problems are sufficiently significant and you notice them during your walk-through inspection, they can be addressed and hopefully resolved prior to closing. If you notice them after closing and they were misrepresented to you by the seller or the real estate agents prior to closing, you may be in a position to seek legal remedies from the seller. Otherwise, you may be out of luck.
This is determined by your contract. Absent a provision to the contrary, the seller may remove anything that is not attached. However, anything that is attached is considered a “fixture” and may not be removed.
Contact your real estate agent and attorney immediately. If you notice this during your walk-through inspection, it can be addressed and hopefully resolved prior to closing. Otherwise, it may be necessary to pursue the seller for the return or cost of the improperly removed items or for the cost of removing and disposing of items that should have been removed prior to closing, as the case may be.
Once the closing date has been established, the seller should contact the utility company and advise them to terminate their service in the seller’s name as of the date of closing and the buyer should contact the utility company to request the service be transferred to the buyer’s name as of the date of closing. If this is done substantially simultaneously, there is usually no additional service charge to transfer the service account which would otherwise be charged to the buyer if the seller were to terminate the service and the buyer were to thereafter request new service to the property.
This is necessary since New York State law requires a seller of residential property to provide carbon monoxide and smoke detectors when the property is transferred and you will be required to sign a sworn statement at closing that this is the case.
The buyer receives a credit against the purchase price in the amount of the deposit. This means that the amount the buyer is required to pay at the time of closing is reduced by the amount of the deposit. The deposit itself is either used to pay obligations of the seller (such as real estate agent commissions) or released to the seller.
The “Truth-in-Lending Statement” is a form that the Federal Government requires be given to you by your lender in connection with your mortgage loan. It is intended to disclose to you the true costs and expenses that you incur in financing the purchase of your home. Unfortunately, the format of this statement and the fashion in which the information is calculated makes little sense to most people. Not only is this statement generally considered to be of very little help, many people consider it to be confusing and misleading. However, you are obligated only with respect to the figures and information stated on your note and mortgage documents, regardless of what is stated on the Truth-in-Lending Statement.
The “HUD Statement” is a form, required by the Department of Housing and Urban Development when a buyer receives conventional mortgage financing which is prepared by the buyer’s lender and signed at closing, listing most of the amounts paid and received by the buyer, the seller and the lender in connection with a real estate transfer.
A “Closing Statement” is a written statement, prepared for you by your attorney, which indicates how your money was applied at closing. This may be used by you, both to document and recall your expenditures, and as proof of payment of various expenses for tax purposes.
You will be able to review a preliminary closing statement with your attorney at closing. You will typically receive your final closing statement and closing documents within a week following your closing.
The transfer is final when the closing documents are recorded in the County Clerk’s Office. Since most closings take place at the bank attorney’s office rather than the County Clerk’s Office, the documents must first be delivered to the County Clerk for recording before the transfer is considered finished.
Funds cannot be released until the transfer is completed, which means when the transfer documents have been recorded in the County Clerk’s Office. This can take anywhere from several minutes to several days. Usually, the closing documents are recorded within several business hours after the closing. Once the closing documents have been recorded, the proceeds can be released.
Similar to the deposit on the contract, money held in furtherance of a closing is held in escrow and does not earn interest for the buyer, the seller or the attorneys.
Typically, one key is delivered to the buyer by either the real estate agent or the seller’s attorney at closing and the rest of the keys, the garage door opener and any other information and documentation regarding the house is left for the buyer in the house. However, any other arrangements that are more convenient can certainly be made.
Since you never know who might have been given a key before you bought the house, it is always a safe practice to have the locks changed.
Once the deed is recorded in the County Clerk’s Office, it will be sent to you by the County Clerk, usually within 6-8 weeks after closing. It is not unheard of for the recorded deed to be lost at some point before the buyer receives it. This is not a problem. Once the deed has been recorded, the transfer is final. Therefore, the original deed is no longer necessary. Your attorney will make certain the original deed gets properly recorded, following which you can always obtain a certified copy of your deed from the County Clerk, showing it has been properly recorded.
Since the original deed is no longer of significance once it has been recorded, it is not a valuable document and does not require any special attention. However, it is a good idea to keep it with your real estate documents as it may be of use to you in the future.
Some lenders retain abstracts until the mortgage is paid off. Otherwise, the abstract is usually held by the Abstract Company that worked on your purchase. If you wish, you can direct the abstract company to send it to you.
Unlike the deed, the abstract is a valuable document that you will need in the future and which may be expensive to replace if it cannot be located. Therefore, you may wish to allow the Abstract Company to hold the abstract for you, as it will be their responsibility to replace it if it is lost. In this case, simply confirm that the Abstract Company is holding your abstract and keep the name of the Abstract Company and the abstract number with your real estate records. If you intend to hold your own abstract, be certain to keep it in a safe place where you can locate it if you need it in the future.
Feel free to call us with any questions or problems you may have at any time.
There are many different things that should be considered after a closing. Some of these are:
1) If any money has been held in escrow at closing to insure payment of an expense or performance of an obligation, it is important to make certain that these monies are properly disbursed following closing, in accordance with the escrow agreement.
2) The purchase or sale of a house often creates various tax obligations and/or planning opportunities, which should not be overlooked.
3) Buyers should make an application to the STAR program for reducing property taxes and should be aware of the various expenses related to home ownership that can be deducted on income tax returns.
4) Both buyers and sellers should be mindful of their record keeping with respect to improvements to the property, which may reduce potential capital gains taxes.
5) It is also a good time to evaluate your various insurance needs to determine if you are properly and adequately protected.
6) The purchase or sale of a house often marks a change or transition in one’s life. At such times, it is often appropriate to make certain that your plans for the future and the future of your family have been adequately taken into account. Specifically, it a good time to prepare and/or review your Will, Power of Attorney, Health Care Proxy, Stand-By Guardianship Appointment and other life and estate planning documents.