i. closings

8/6/2019 I. Closings

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Checklist for a Successful Closing

1. Importance of the Real Estate Contract

a. The Executed Oer to Purchase and Contract dictates the closing.

b. Avoid problems-be precise.

1. Improper legal description may lead to invalidation o oer to purchase

(remember the Statute o Frauds).

2. Improperly worded contingencies may cause closing difculties or lead tovalidation o the oer to purchase.

2. Communication

a. Contact attorney as soon as property is under contract to allow attorney

opportunity to prepare or upcoming closing. Upon initial contact with attorney,determine whos taking care o what-avoid adversarial relationship.

b. Closing inormation sheets and/or Listing/Selling Agent Checklists are

attached or organizational assistance.

1. Use closing inormation sheets (attached) to record pertinent inormation,

i.e. previous loan number and payo inormation or repair work and costs.

2. Communicate as much inormation as possible via Listing/Selling AgentChecklists (attached)-these can assist the attorney in preparation o

closing statements and avoid several telephone calls. I all inormation is

unavailable, communicate as much as possible as soon as possible. Early

inormation allows attorney to be able to provide a closing statement less

one or two items which can be added when available.

3. Communicate the Sellers mortgage account number and lender

inormation as soon as possible. Many out o state lenders will not providepayo inormation in less than ten business days. Delays in providing this

inormation to the closing attorney may result in a delayed closing.

4. Contact attorney or his sta immediately upon loan approval so attorney

can order survey and immediately perorm title search.

c. I ax machine is available, ax closing inormation sheet or Listing/Selling


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Agent checklists to attorney. Fax machines have become a necessity in this

trade and very useul, especially i youve been receiving a busy signal when

trying to call the attorney.

d. I attorney is difcult to reach, ask receptionist i attorneys ofce has aparalegal/secretary responsible or preparation o closing packages. This

person is oten very useul in assisting you in conveying inormation tothe closing attorney and this person can oten respond to your needs

immediately.

3. Title Insurance

a. Obtain previous policy inormation as soon as contract is signed and convey

to closing attorney. I you are listing a property, it would be a good idea to

locate prior title policy inormation at the time you take the listing and save it

in your fle in order to prepare or upcoming closing.

b. Bring-downs rom prior title policies save attorney time (shorten title search

period) and save buyers money (reissue rates are less expensive than a new

policy).

c. Saving time and money wins buyer loyalty-reaching closing table aster

appreciated by both buyer and seller.

4. Survey

a. Obtain previous survey inormation as soon as contract is signed and conveyto closing attorney. I you are listing a property, it would be a good idea to

locate prior survey inormation at the time you take the listing and save it in

your fle in order to prepare or upcoming closing.

b. Updates on previous surveys save time and money. I the surveyor is stilldoing business he can oten update his prior survey work quickly and may

oer a discounted price or an update o his previous work. Further an

update can oten be completed much quicker by the surveyor and not delay

upcoming closing.

c. Saving time and money wins buyer loyalty-reaching closing table aster

appreciated by both buyer and seller.

5. Access/Road Maintenance

a. Determine immediately whether access to property is over private easement.

This can be accomplished by contracting the Department o Transportationor Municipality. I so, veriy whether there is a recorded document conveying


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access to property. This can oten be accomplished by notiying closingattorney o a potential problem prior to loan approval with instructions to

look or potential problem prior to loan approval with instructions to look or

potential access problem during title search.

b. I access is over private easement, also determine i there is a recordedroad maintenance agreement (universal lender requirement). I no recorded

maintenance agreement exists, contact the closing attorney prior to loan

approval and inorm him that this may be a requirement o the upcoming

closing in order to avoid unnecessary delays o a potential closing.

6. Homeowners Insurance

Explain to buyer at time contract is signed that hazard insurance will be required

and fnd out what company/agent buyer intends to use (avoids last minute rush to

obtain insurance binder or policy). Please note that i the lender will be escrowing

or insurance it is a necessity that this inormation be provided to the closing attorneyin order or said attorney to complete the closing statement. Dont rely on insurance

agent to get binder or policy to closing attorney prior to closing.

7. Pest Controla. The contract dictates who pays the cost o the pest report and repairs.

b. Pest report may indicate prior or current structural damage; i so, a letter orm

a general contractor licensed in the State o North Carolina indicating that no

structural damage has occurred may be required by the new lender.

8. Avoid Raising New Issues at the Closing Table

Do not raise new issues at the closing table. The closing o the transaction is not the

time to present new issues or to negotiate old ones. Deal with all issues regarding

the closing as soon as they are raised in order to avoid not crossing the fnish line, asmooth closing will result (i.e. in the event the Seller intends to retain possession o

the premises post closing, negotiate all terms o said delayed possession prior to the

closing table).

9. Attorneys Feea. Have the buyer contact the closing attorney at the time o the execution o

the Oer to Purchase to discuss attorney ees. Fees may vary depending on

many actors such as length o title search, whether or not transaction involves

a loan or cash deal, amount o attorneys risk (purchase price), whether chain

o title is out o an estate or other actors that may increase the amount o time


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involved.

b. Additional expenses may be incurred to remove title deects or to cover

expenses such as express mail charges, long distance phone calls,

excessive copies, axes, etc.

10. Conclusion

By obtaining and eectively communicating as much inormation as early as possible,

the Realtor and attorney can enjoy a smooth closing o the present transaction assoon as possible and move on to the next one.


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Purchaser/Owner: Existing Loan

With:

Closing Date: Ordered:

Phone: Received:

Place: Checked:

Loan #:

Seller: Payo: Fee Quoted/Charged: As o:

Phone: Per Diem:

Contract Price: Contact:

Phone:

Property Address:

Ward:

Sheet:

Lot(s):

Card Prepared: Card Turned In:

Realtors

Seller:

Phone:

Commission:

Purchaser:

Phone:

Amount:

Lender

Contact:

Phone:

Loan Amount:

Type o Loan: Loan Pkg.Request:

Loan Pkg. Recd:

Loan Pkg. Cmpltd:

(Inormation Sheet)


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1. Property Inspections: Obtain all inspections in a timely manner. Pursuant to the

standard orm Oer to Purchase and Contract, all inspections must be completedby a specifed date and written notice o necessary repairs shall be given to

Seller on or beore a stated date. I required, address who shall be responsibleor securing a Housing Certifcate and whether or not such repairs are part o the

inspections provision. It is important or the agent to create realistic expectations

as to what is a reasonable repair request. An inspector may fnd and recommend

all sorts o repairs which are revealed by an inspection, but such repairs are not

o the type and quality contemplated by the Contract. The Contract specifes thatspecifc items may be inspected and such items shall be perorming the unction

or which intended and shall not be in need o immediate repair. Many buyers haveunrealistic expectations as to what should be repaired when in act these items

are not repair items but are part o the responsibility o home ownership. I the

buyer would like certain aesthetic items corrected then such items should be setorth in the Oer to Purchase and the inspection and repair provision should not be

relied upon to request such aesthetic items. On the other hand, i the Seller agrees

to undertake necessary repairs, then both agents should ollow up to make sure the

repairs are completed within a reasonable time prior to closing.

Many problems at closing arise out o1) inspections which were not completed in a timely manner or

2) repairs which were agreed upon but which have not been completed in a timely

or work-like manner. Have all inspections and repairs completed in a timelymanner. Create reasonable expectations or both the buyer and seller as to what to

expect regarding proper repair requests and anticipating repair requests.

Although sometimes things happen to property that cannot be anticipated and must

be dealt with at Closing, do not expect an Escrow Agreement to resolve all issues.An Escrow Agreement is in large part a lawsuit waiting to happen. Generally an

Escrow Agreement is appropriate when an inspection item is not in the same

condition as when inspected with a clearly defned and known problem and

resolution and cost or such resolution. Furthermore, many lenders do not allow

escrows or credits or repairs which raises lender compliance issues and RESPAregulation issues.

What is reasonable to expect: It is reasonable to expect that the closing

attorney will lend some guidance and calm to a contentious repair issue so that

Goosmann and RosesTop Ten List or Smooth and Successul Closings


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the parties can make a calm and inormed decision which is suitable or both

parties. It is also reasonable that the closing attorney drat an escrow agreement

(in the proper situation) that addresses the needs and desires o the parties.

What is unreasonable to expect: It is unreasonable to expect the closingattorney who has never seen the property to attempt to resolve an issue which

should have been addressed days or even weeks ago. This creates ill will orthe agents and the closing attorney among the buyer and sellers. It is also

unreasonable to expect the closing attorney to spend an inordinate amount

o time negotiating the terms o the repair issues and terms o an escrowagreement such as to amounts and times or the repair and escrow. Also, it

is unreasonable to expect the closing attorney to put a credit on the closing

statement or the repair item when such a credit is not allowed by the buyers

lender.

2. Homeowners Insurance: Secure homeowners insurance (hazard insurance) assoon as possible and transmit to Closing Attorney (usually 7 days beore closing).

DO NOT WAIT TO OBTAIN THIS AT THE LAST MINUTE WHILE NEGOTIATING

WITH INSURANCE AGENTS or a dot.com insurance company. Due to RESPA

(The Real Estate Settlement Procedures Act), the lender must calculate an

aggregate adjustment o its escrow account and provide a detailed accounting tothe borrower. This requires the lender to analyze the projected escrow account

BEFORE closing and BEFORE THEY SEND OUT THE LOAN PACKAGE OR

CLOSING PROCEEDS. In addition to this, most insurance companies now pull

credit reports on their insured, need copies o certifed appraisals (when available)

and signed applications BEFORE they will issue insurance binders. Also, someinsurance companies have interpreted the new ederal privacy policy act as

prohibiting it rom releasing any inormation about the insured to the REALTOR or

attorney without written authorization rom the insured. Note: FLOOD INSURANCE

is not a standard coverage item in most hazard insurance policies but a rider with

a separate premium which usually takes much more time to obtain than a regularhazard insurance policy. AVOID DELAYS IN YOUR CLOSING BY ENCOURAGING

YOUR BUYER TO OBTAIN THEIR INSURANCE WELL BEFORE CLOSING.

What is reasonable to expect: Call insurance agent several days prior to closing

with loan inormation to assist with proper issuance o binder and communicateinormation to lender to assist with obtaining loan package.

What is unreasonable to expect: Expect attorney to coordinate contact

between buyer and insurance agent when agent has not even been selected. It

is important or BOTH the REALTOR AND ATTORNEY to encourage the buyer

to contact their insurance agent and provide SUFFICIENT inormation or theissuance o a binder AS SOON AS CONTRACT IS EXECUTED. Do not expect


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your buyer to know how to do this. Nudge them to avoid delays.

3. Importance of Proper Draftsmanship in the Offer to Purchase and Contract:

In flling out the orm contract, be careul to avoid the pitalls that await many real

estate agents in the haste to get a transaction under contract. The NC Real EstateCommission takes a hard line approach to agents that drat contracts or contract

provisions. This does not stop at oers to purchase but also involves leases,options, land sales (or installment land sales) agreements, listing agreements

or other real estate related documents. Do not put your license on the line by

avoiding using an attorney or assistance.

Additionally, be extremely careul when dealing with legal descriptions, particularly

with urther subdivision o property due to subdivision ordinances in most

NC counties with improperly worded contingencies which may cause closing

difculties or lead to invalidation o the agreement altogether (i.e. defnition o

closing costs in the applicable paragraph o the standard Oer to Purchase).

What is reasonable to expect: Be available, within reason, to review contract

questions and respond in a timely manner to requests. However, timely does

not mean that the attorney can respond within minutes. Oten, the agent may

have to rough out a proposed contract statement and send it to the attorney andcall to review or arrange to schedule an appointment to meet and review the

proposed contract issue depending on the request.

What is unreasonable to expect: It is unreasonable to expect the attorney to

be able to drat a contract term with only a voicemail message rom the agent.Oten, to properly drat a contract contingency, it is imperative or the attorney

to have all o the inormation in possession o the agent and not just a portion

o it and a day or two delay might elapse in some instances, depending on the

request and schedule o attorney being contracted.

4. Good Funds Act Requirements: Due to NC State Bar and NC STATE LAW

Requirements, any party (with the exception o a reputable real estate companys

earnest money check) that delivers unds to a closing must present unds that

receive immediate credit at the attorneys lending institution that maintains his

trust account. Numerous closings are delayed or borrowers that ail to anticipatedelays in clearing unds rom 401 (k) accounts, IRAs, money market accounts,

stock brokerages, or other personal sources. IT IS IMPERATIVE or an agent to

make their BUYER AWARE OF THE NEED FOR GOOD FUNDS to close as soon

as possible and not wait until the closing statement is generated the day beore

closing to commence encouragement o the buyer to make unds available. Manybuyers do not realize that checks, even those identifed as teller checks, cashier


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checks, broker investment checks or other band type checks (while ofcial in theirappearance) are not aorded immediate credit. CERTIFIED FUNDS ONLY OR A

WIRE TRANSFER OR CASH are the only ones given immediate credit.

What is reasonable to expect: It is reasonable or an attorneys ofce to be

expected to produce a closing statement by the evening prior to the date oclosing. I your buyer is nervous about how much money to obtain or closing,

please ask the buyer to obtain certifed unds in the amount provided on Good

Faith Estimate rom the mortgage broker/lender. This will allow the buyer the

opportunity to get a check and not be worried about that detail. The attorney

can then return excess unds at closing and usually will accept a smallpersonal check or small shortages.

What is unreasonable to expect: For the buyer to expect the attorney to

have a 100% accurate closing statement prior to its review by ALL PARTIES

INVOLVED in the closing. Attorneys oten do not get closing packages until

3pm or later in the day beore closing. It takes several hours and much eortto properly prepare a closing package and thereore, most closing statements

are communicated to all parties at the same time late that evening prior to

closing. In some instances, it is not until the closing statement is generated

that a party (buyer, seller, lender or realtor) realizes something has not yetbeen communicated or may have been communicated but was not included

by the closing attorney on the closing statement. Please be mindul that the

changes we oten are making at the closing table were communicated to the

closing paralegal or attorney minutes beore closing commenced and patience

is requested to modiy documents and allow or these last minute changes.

5. Attendance at Closing: Confrm the attendance o all parties; including the buyer

and seller (and their respective spouses, i any). I the buyer and/or seller will not be

attending closing, then confrm that appropriate arrangements have been made with

the closing attorney well in advance o closing so that the closing documents can be

properly executed prior to or at the closing.I the Buyer has a local person that the buyer trust, then most lenders, but not

all lenders, will allow the closing documents to be signed via a Special Power

o Attorney. The closing attorney should be inormed that the buyer will not beattending closing and who the local signatory will be well in advance o the closing

date so that a Special Power o Attorney can be prepared and sent to the Buyeror execution. I the Buyer does not have a local signatory who can be appointed

the attorney in act or i the lender does not allow execution o the loan documents

pursuant to a Special Power o Attorney, then the agent should advise all parties

to expect a delay due to the turn around time required or receiving the loan

documents rom the lender, preparing the closing documents, express mailing


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the closing documents to the buyer and the buyer properly signing the same and

sending the documents and certifed unds to the closing attorney or closing.

I the seller is not going to be at closing, then the agent should also confrm that

appropriate arrangements have been made with the closing attorney well inadvance or closing so that the Seller documents can be sent to the Seller. Most

oten these Seller documents will include a Closing Authorization which allowsthe agent to sign the Closing Statement on behal o the Seller. The agent should

exercise due care to review the Closing Statement with the Seller prior to closing so

that the agent ulflls its duties to the Seller prior to executing the Closing Statementon behal o the Seller.

Also, domestic and marital situations as well as the Estate Administration o a

deceased Seller present special concerns (emotional and legal). Please advise the

closing attorney i you know that a closing may involve a domestic or Estate issue.

Special considerations can then be made to address the legal and emotional issuessurrounding these circumstances.

What is reasonable to expect: It is reasonable or the closing attorney to

properly deliver the closing documents to a party or execution i notifed within

a reasonable time prior to closing and i the closing attorney receives othernecessary documents rom third parties within a reasonable time prior to

closing. It is reasonable or the closing attorney to make reasonable eorts to

accommodate parties schedules and locations.

What is unreasonable to expect: It is unreasonable or the closing attorneyto anticipate that a necessary party will not be available or closing. A closing

attorney presumes that all necessary parties will attend closing unless the

closing attorney is notifed in writing in advance o closing with all relevant

inormation.

6. Manufactured and Modular Homes:

I a manuactured or modular type home is on the property, then the agents should

immediately inquire as to the status o the title to such home.

Locating the title and determining the status o the title is an important issue as thehome will not be considered to be part o the real estate (and title insurance issued or

such matter) unless satisactory evidence can be obtained setting orth that the title

has been cancelled.

It is not sufcient that the home is on a permanent oundation and afxed to the realestate.


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I there is record evidence that manuactured home in on the property (either by

survey or reerence to the unit in a deed or deed o trust), then it is important to

ascertain the status o the title prior to the closing.

It may not come to the closing attorneys attention until a day or two prior to closing (i

at all) that a manuactured home is located on the property.

In years past, it was somewhat easier to determine the status o title to the

manuactured home.

The closing attorney could call the Department o Motor Vehicles and in some cases

receive verbal assurances over the telephone as to the status o the title.

The closing attorney could usually then obtain an afdavit rom the seller as to the

condition o the manuactured home and based upon such items obtain title insurance,insuring that the home was part o the real estate.

Now with the ederal policy laws, the Department o Motor Vehicles requires original

written authorization rom the seller on an approved DMV orm and then several

weeks (i at all depending upon the age o the title) to state whether or not the title isstill outstanding.

This is important because so long as the title is outstanding, then the manuactured

home cannot be considered to be a part o the real estate.

It is also sometimes difcult to determine whether or not a home is a manuactured

home or a modular home.

Furthermore, a modular home may or may not have had a title issued which

urther complicates the inquiry as to the status o the improvements. What is reasonable to expect: It is reasonable to expect the closing

attorney to gather available inormation when the closing attorney is aware o

the existence o the manuactured home (i at all) and based upon the time

constraints and the inormation available attempt to then obtain title insurance

or such matter; however the likelihood o success on this issue is directly relatedto the amount o time and inormation available.

What is unreasonable to expect: It is unreasonable to expect the closing

attorney to become aware o the existence o a possible manuactured home

and to determine the status and location o the title in a matter o days. This isan issue which most appropriately is addressed when the property is listed or


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sale. I a manuactured type home is located upon the property, then ask the

seller at the time o the listing where the title is located and contact an attorney

up ront so that the issues can be addressed during the listing period and thus

well in advance o closing.

7. Lending Practices: Use a LOCAL LENDER or BROKER to assist with the

fnancing or the Closing. The Local Lender or Broker is essential so thatyou have a local presence as well as a human contact and not a computer at

1-800-IDONTCARE or WWW.SOWHAT.COM. Be certain the Buyer is providing the

inormation requested by the lender in a timely manner. Make sure your client isaware o the current market conditions aecting Lenders and the service providers

afliated with them. In time sot market glut, like we are currently experiencing, the

volume in the market and experience o the broker and loan processor will dictate:

a) How quickly an appraisal can be completed and the loan underwritten,

b) when the package will be sent to the closing attorney and

c) when loan unds will be a wired or sent to the closing attorney or disbursement.

What is reasonable to expect: It is reasonable to expect the closing attorneyto provide to the lender the pre-closing items which the lender reasonably

requests o the closing attorney prior to closing; such as taxes, Commitment

or Title Insurance and hazard or homeowners insurance (see importance o

section above) so that the loan package can be timely delivered or closing due

to no ault o the attorneys ofce. This presumes timely receipt o the Oer toPurchase and Contract and other necessary inormation rom the buyer and

seller and agent so as to allow the closing attorney to coordinate the closing

process.

What is unreasonable to expect: It is unreasonable to expect the closing

attorney to orce the lender or broker to send a closing package to theclosing attorney. Many times an agent will call an attorneys ofce and ask

that the attorney call the lender and make them send us a loan package or

closing. This is unreasonable and most oten happens when the buyer is using

1-800-IDONTCARE or WWW.SOWHAT.COM type lender. The closing attorney

has no more o a relationship with these types o lenders than the agent or thebuyer and cannot make it happen. It is also unreasonable to expect or the

closing attorney to get a package the morning o closing and be expected to then

undertake the proper preparation o a closing package and to conduct an error

ree and smooth closing while scrambling to respond and react to the last minute

receipt o a loan package.


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8. Marital Status: Discuss with your client how you wish to hold title to the property(i.e. as husband and wie or individually or in a corporate name, in a trust or other

type o entity). I MARRIED, and obtaining a bank loan, a spouse will be required

to execute some documents at closing regardless o the act that a buyer might be

obtaining title in that buyers name only and the loan might be in that name only.

The only way to avoid this is to:

1) purchase or cash;

2) have a Special Power o Attorney which allows one party to execute loan documents

or the other (but be careul and make sure the Lender being used will allow a POA assome will not allow) or

3) have a recordable waiver o marital rights agreement releasing any potential spousal

interests. Remember that this applies to selling property as well and a spouse will

have to join in the deed o conveyance, even i his or her name is not on the title.

9. Title Insurance/Survey: Ask the Listing Agent, Seller and/or closing attorney to

obtain or provide a copy o the prior title insurance policy and survey, i available,

to hopeully save your client time and money on the transaction. Note regarding

using prior title insurance: updating rom a prior title policy is called a bringdown ortacking and may reinsure over existing title difculties at a reduced premium to you.

I the reinsurance insures over existing title difculties please understand that the

problem is not corrected, but insurance has been obtained to protect the client and

the lender against said difculties to the extent o the policy terms.

Note regarding surveys: obtaining a new survey is always recommended and saeapproach to a purchase closing. A new survey may bring to light potential problems

such as encroachments and the location o easements and rights o way aecting the

property. The buyer may want to consider obtaining an updated survey rom the same

surveyor the seller used (i the seller has previously obtained a survey) because the

previous surveyor might give a reduced rate given that they likely have the propertymapped in their computer. However, most title insurance companies will now provide

title insurance protection or a lender over matters o survey without obtaining a new

survey and most title companies will now issue an Enhanced Owners Policy givingthe buyer extended coverages including survey coverage without a survey actually

being obtained. O course the Enhanced Owners Policy is at a slightly higherpremium. This is a good cost saving tool and expedites the closing, but remember it is

easier and less stressul to know o and deal with a problem beore closing rather than

waiting or and relying on a title company and other parties ater closing.

10.Closing Attorney: Contact your closing attorney at the time the Oer to Purchase


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and Contract is signed and secure his or her services at that time. It

is helpul or you to have a comort level with the closing attorneys

ofce. Familiarize yoursel with the attorneys system, most good

ofces have a system in place geared to let you know where to direct

inormation based upon the client, the lender they are using or wherethey are purchasing or selling. Communicate with the attorneys ofce

to be certain you are all on the same page as to times, dates, andexpectations so that no closing delays will be attributed to a lack o

inormation sharing. It is best to obtain an experienced attorney; use

an attorney that concentrates mainly in Real Estate. They will haveexperience handling title or closing problems that you might encounter

during your closing process and will be able to deal with those issues

as they arise with less difculty.

i. closings

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