Are we closed yet?? – Understanding when Closing occurs and what it means for your Seller

One of the most common questions real estate attorneys get at the end of a transaction is “Are we closed?” Buyers are anxious to receive the keys and start moving in boxes and Sellers are anxious to see the closing funds in their account. However, Sellers are sometimes surprised to find out that the transaction can be closed and the Buyers can take possession before the funds are actually in the Seller’s account.

Section 4 of both the “AS IS” and the “Standard” FR/BAR Contracts state that Closing shall occur when:

  • All funds required for the Closing have been collected by the Closing Agent and
  • All closing and loan documents are fully executed and delivered by the parties.

Section 6 of the Contract states that: “Seller shall, at Closing, deliver occupancy and possession of the Property to Buyer…” Meaning once the requirements above are met, the transaction is closed, and the Seller must vacate the Property and relinquish the keys to the Buyer.

Once a transaction is closed, the Closing Agent will disburse the funds to the Seller and any other third parties receiving funds from the transaction. Wires between banks can sometimes take a few hours to post into the account. Therefore, the funds do not have to be in the Seller’s account to be “closed.” However, Sellers are sometimes reluctant to hand over the keys before the wire with closing funds hits their account. Thus, it is important that Sellers understand how the process works before Closing.

What if Closing Occurs Late in the Day?

If Closing occurs late in the day, the Seller may have to deliver possession (keys) even though the funds may not post until the next business day. If Closing occurs on a Friday, it could mean the Seller should not expect to see funds in their account until Monday.

You can help Closing day go more smoothly by explaining this process to your client in advance so they know what to expect. As always, should you have questions about this topic or other real estate related matters we recommend you consult with your local real estate attorney for further guidance.

Sincerely,
Jill Bowen, Esq. jbowen@berlinpatten.com
Jill primarily focuses her practice on residential real property transactions.

 

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