As real estate attorneys, we get a lot of questions at the closing table. One of the most prevalent questions, and perhaps the most important, seems to be “Are we officially closed now?!?”. What we would love to say every time is “Yes, congratulations!!”. Unfortunately, there are times we have to be the bearers of bad news and explain that we cannot hand over those keys quite yet.
In order to be officially closed (which means the Buyer legally owns the property), the following must occur:
• All closing and loan documents must be fully executed and delivered by the parties;
• The Closing Agent must be in physical possession of original executed documents which are to be recorded (ex: the deed, the mortgage, any affidavits, Notices of Termination, Power of Attorney, etc.)
• All funds must be in the account of the Closing Agent.
• All three of the above requirements must be met in order to be officially closed.
Here are some situations where the transaction is NOT closed:
• The Seller’s deed or the Buyer’s loan documents were signed remotely today but will not be delivered to the Closing Agent until the following day.
• Since the Closing Agent will be recording the deed and certain documents from the Buyer’s loan package, the Closing Agent must be in physical possession of these documents before closing.
• The Borrower or Lender has sent their wire, but it has not been received by the Closing Agent.
• One of the most common (and unfortunate) situations is when a Buyer or lender initiates their wire at 4 pm the day of closing, and the wire does not post until the following day. In this situation, the property does not belong to the Buyer until all the money actually hits the Closing Agent’s account.
• Borrower initiates an ACH payment or brings a personal or cashier’s check on the day of closing for their cash to close.
• Remember, the Buyer is required to make payment in immediately available funds (i.e. via wire). ACH payments, cashier’s checks, and personal checks are not considered immediately available funds. If the Buyer is unable to wire for any reason, this should be coordinated well in advance with the Closing Agent to plan alternative methods of making payment.
Keep in mind, if the closing will extend past the original Closing Date in the contract for any reason, make sure you get an addendum signed by all parties agreeing to the new Closing Date. One of the most crucial roles of a real estate agent is to help their client avoid any potential roadblocks or delays in closing, and; communication with the Closing Agent early and often is the key to achieving this. If you have any questions or concerns about facilitating a smooth and timely closing for your client, please reach out to your trusted real estate attorney for legal advice.
Bishoy M. Habib, Esq., M.B.A firstname.lastname@example.org
Berlin Patten Ebling, PLLC
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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