Real Estate Closings Law

1. Can I do the closing by myself?

2. Do I need a lawyer for my closing as a seller?

3. I am paying cash for my property. Do I need a survey and title insurance?

4. What are closing adjustments?

5. What happens at the closing?

6. What is the closing statement?

1. That would be nearly impossible, that is to do a closing by yourself. An attorney or a proper settlement agent who knows the rules of real estate law is required to conduct a closing. First of all, you heave legal instruments that need to be prepared for a seller, such as a deed. And you need to have money coming in from a buyer that goes through an escrow to protect all parties. This can only be effected by an attorney or some competent title company. I recommend an attorney as a closing attorney myself for 42 years. It protects the buyer to get clear title and to not have the buyers funds squandered. It protects the seller to get the funds from the buyer. And to transfer clear title to the buyer.

2. Over my years of practice, there have been many occasions where a seller contacts me to represent them at a closing. It’s not always necessary but in many cases such as when the seller does not have a realtor, or the seller, even though having a realtor feels the issues are complex or they may be in contention going into the closing. There may be a lot of adjustments in the closing, a lot of separate money issues that have to be resolved at the closing. Or there may be title issues that have to be resolved at the closing. There could be situations of a divorce where a party wants to have protection. Usually the buyer is represented by the closing attorney or the buyer’s lender. The seller is unrepresented. Yes, representation for a seller is very appropriate in many situations.

3. When you purchase any real estate, I recommend owner’s title insurance. You may purchase real estate through a lender and get charged a lender’s title insurance policy. That doesn’t protect you. You need an owner’s title policy. I recommend it to all of my purchasers. Survey is another matter. If you’re purchasing a property in an established subdivision, usually a survey is not an issue and is not required, unless you know of certain boundary issues, like a fence, or overgrowth of trees and so forth, a driveway issue. If there’s any kind of possible issue like that, where there might be a boundary problem, a survey would be a proper thing to do, and it’s a one time purchase.

4. When you purchase real estate or sell real estate, you will see on your closing statement adjustments. Adjustments can be property taxes, property taxes that are either prepaid by the seller or to be paid by the buyer. In either case, there’s an adjustment in favor of the party who does not pay the property taxes. What else could there be? Assessments like condominium assessments or a maintenance association assessment. Additionally, there are adjustments for interest. If you’re a buyer and you’re borrowing money, your lender may want interest from the day of closing through the end of the month. Other adjustments might include an allowance by the seller to the buyer. For example, there may have been some issues regarding the condition of the property and the seller gave a flat allowance of $5,000.00. That would be an adjustment and would appear on the closing statement. There may be other closing adjustments but those are the main ones.

5. A closing is the culmination of the performance by the seller and the buyer of the terms of a real estate contract. For example, the buyer’s coming to closing to get ownership of real estate. The seller’s coming to closing to get the equity that the seller has in the real estate. The buyer needs to provide consideration, the form of a deposit, cash at the closing, wiring funds, a bank loan. Whatever it is, the buyer needs to come up with the money. The seller is looking to convey clear title. Also at the closing, you’ll have real estate agents typically and you might have a lender and you might have a paralegal assisting the attorney. It is the final situation where everybody’s together sitting down and finishing off their responsibilities in the performance of the real estate contract.

6. The closing statement is the mathematical way of showing how the contract is performed. It shows the selling price, it shows the deposit by the buyer, it shows the loan that the buyer is getting if the buyer is receiving a loan, it shows the adjustments between the parties, it shows the real estate commission, the closing costs. It more or less capsules the entire contract process in one document. Nowadays there is a closing disclosure for buyers in a residential type of closing. In a commercial closing there’s a HUD1 or some other type of debit/credit type of closing statement. In either case, it shows who’s money is going where, and it is a complete picture of what full performance under a contract is.