The closing process in a real estate transaction involves several key steps to ensure that the title is free and clear of defects and that the transaction proceeds smoothly. Here’s a detailed breakdown of the process you described:
Contract Execution and Submission:
- Execution of Contract: Both the buyer and seller sign the purchase agreement.
- Submission to Closing Attorney: The parties send the executed contract to the closing attorney’s office.
- Earnest Money Deposit:
The buyer deposits earnest money into a trust or escrow account managed by the closing attorney.
Contract Execution and Submission:
- Receiving Documents: The attorney receives the chain of title and the recorded documents from the abstractor.
- 30-Year Title Search: The attorney conducts a comprehensive review of the past 30 years of title documents to ensure there are no defects, liens, encumbrances, or breaks in the title.
Title Review
- Ordering Title: The closing attorney orders a title search from an abstractor. An abstractor is a professional who searches public records to create a chain of title.
- Chain of Title: The abstractor compiles a history of the property’s ownership (chain of title) and retrieves
Title Commitment
- Creating Title Commitment: Based on the title review, the attorney prepares a title commitment. This is a document issued to the lender outlining the conditions under which a title insurance policy will be issued.
- Identifying Defects: If there are any defects or issues in the title, the attorney notifies the lender or the buyer. Common issues include unpaid taxes, undisclosed liens, or restrictions on the property.
Resolving Title Issues
- Clearing Title: The attorney works to resolve any title issues to ensure the title is free and clear. This might involve negotiating with lienholders, clearing up errors in public records, or obtaining necessary releases.
- Communication: The attorney keeps the lender and the buyer informed about the status of the title and any actions taken to clear any issues.
Finalizing the Transaction
- Clear Title: Once we confirm the title is free and clear of defects, we can proceed with the transaction to closing.
- Closing: he closing attorney supervises the signing of all closing documents, including the deed, loan documents, and settlement statement.
- Disbursement: The closing attorney disperses funds according to the settlement statement, ensuring all parties, including the seller and any lienholders, receive payment.
- Recording: The appropriate government office records the deed and any other necessary documents, officially transferring ownership to the buyer.
Post-Closing
- Title Insurance: Both the lender (lender’s policy) and the buyer (owner’s policy) receive title insurance policies to protect against future property claims.
- Document Distribution: The closing documents are distributed to the buyer, seller, and lender.
Conclusion
The process involves taking all necessary steps to verify and clear the title, assuring both the buyer and the lender of an encumbrance-free property. The closing attorney critically coordinates these activities, resolves any issues, and facilitates smooth ownership transfer.
~Ashley Hedden
Want to learn more about Closing process? Connect with me thru Email or visit my Website!
