How to Prepare for a Closing

Closing on the purchase of vacant land or a building is an exciting but stress-inducing process. Almost all deals will involve some property inspection, title review, and other due diligence.   Once you get past these milestones and proceed to close, you will likely have some questions. However, with an experienced real estate attorney by your side, you’ll have access to answers that give you the reassurance to guide you through closing.

What is a Closing

A closing is short for closing on escrow.  it is simply the event where the buyer meets its condition to pay the purchase price into escrow, then the seller transfers the title to the buyer and escrowed funds are disbursed to seller.  Once the real property is transferred and funds disbursed, then the escrow is closed.   The date of closing is usually set in the agreement. 

What to Expect at Closing

The closing date is set in the agreement. The date can be an actual date or a date calculated based on the performance of one or more conditions. Plan on having the appropriate signor be available to execute final documents.   While residential closings often occur in person at the title company’s office, most commercial closings occur with each party delivering documents to the title company on or before the closing date.   The closing process is as follows:

• The title company will verify the identity of the parties. Often the company will require operating agreements and statements of authority to verify the signors. In addition, it is becoming more common for title companies and lenders to require resolutions or member consent at closing time. The title company identifies these requirements in the title commitment.
• Review and sign the title documents, including the buyer's affidavit, settlement statement, utility and tax agreement, TD-1000, and other documents that the title company might require. The final purchase price after any proration of utilities, taxes and closing costs, and other adjustments should be shown on the settlement statement. 
• Review and sign the loan documents, including a deed of trust, the promissory note, and any other loan documents, including, without limitation, the loan agreement, assignment of rents, and guaranty. The lender will condition the disbursement to the seller of loan proceeds on the buyer's execution of the loan documents.
• If applicable, you will want status letters from any relevant owner association.
• If an existing loan needs to be released, it will happen after closing. You want to confirm title company provides title coverage until the release of the seller’s loan is recorded. 
• Your lender will probably wire funds to the title company, and the title company will wire them to the seller’s bank.
• Upon confirmation from the title company that the conditions to closing have been satisfied, the transaction will be deemed "closed."

At your closing, be sure to get all your questions answered. Common closing questions include:

• Where will I send my monthly loan payments?
• Where do I send a payment for the owner’s associations? How do I pay?
• Whom should I call if I have questions after closing?

The Buyer’s Pre-Closing Checklist

• Get all contingencies squared away, and provide the title company in advance with any B-1 requirements applicable to the buyer.
• Confirm all taxes have been paid or appropriate adjustments made to the settlement statement.
• Put title company and lender in contact to coordinate the closing. 
• Review the closing checklist provided by the lender and satisfy the requirements.
• Review any remaining due diligence items such as estoppel certificates or lease assignments.
• Protect yourself from mortgage closing/wire fraud scams.
• Do a final walkthrough and ask questions if needed.
• Deliver all necessary documentation on or before closing.

Buying real estate is a significant event. By following these tips, hiring an attorney to represent your interest, and having everything ready to go, you can help ensure that your closing goes smoothly and that you will turn the key to your new home in no time.