The Key to a Successful Closing? Teamwork
Published on Tuesday, 12 July 2011 07:53 Written by Lawrence D. Brudy & Associates, Inc.
Whether you are a Buyer, Seller, Realtor or Title Officer, the key to a successful closing will be cooperation between all of the parties involved. Included in this article is practical and useful information to often asked questions.
- Review of the Settlement Statement (HUD-1) - In 2008, Congress passed the Housing and Economic Recovery Act (HERA) which became effective July 30, 2009. This legislation should enable lenders to provide closing and loan documents in advance of settlement for review by all parties, where in the past, this was not always possible. Three (3) days prior to closing, buyers, sellers and realtors should be asking for their respective side of costs on the settlement statement and buyers should review the loan documents, sellers should review municipal lien letters, tax certifications and mortgage payoffs.
- Title Commitments - Our firm provides to the buyer’s agent a “marked up” title commitment in advance of closing for review with the purchaser. A marked up title commitment acts in the same fashion as a title policy, which is issued to lenders and/or owners post closing and after all recordings are received in our office.
- Surveys - Buyers should be encouraged to have a new staked survey of the property completed before closing. Encroachment issues regarding fences, sheds, driveways, out buildings, swimming pools and the dwelling should be resolved between the seller and neighboring property owners. Possible solutions for encroachments include removal, easements, rights of way, lot line and subdivision revisions.
- Cash for Closing - Historically, last minute changes to the settlement statement occurred leading up to and at closing. If the settlement statement has not been prepared to final, the buyer should be advised to wire transfer or have a cashier’s check (made payable to themselves or the title company/law firm conducting the closing) in the amount given on the lender’s good faith estimate. Additionally, buyers should bring their personal checkbook to closing. If the cashier’s check or wire transfer is for more funds than needed for closing, a check for the difference will be given to the buyers.
Pennsylvania is considered a “wet” funds state for real estate transactions, thus requiring buyer’s funds to be in the form of cash, cashier’s or certified check or wire transfer.
- Final Walk-Thru - Do it in advance of closing after the seller has vacated the premises. A walk thru is not an inspection, but a confirmation that the property is in the same condition as contracted for and “broom clean”. If the property is a corporation/relocation home, check the addendum as walk-thrus are typically required 24-72 hours in advance of closing to resolve issues.
- Information for Closing - Commission statements including ABC fees, home warranty costs, repair/broker bills should be transmitted in advance to eliminate changes to the settlement statement at the closing table.
- House Inventory - Make sure you have (or know where) the house keys, garage door openers and gas fire place keys are as these are the most often packed or forgotten items when moving.
- Deed of Conveyance - In Pennsylvania deeds almost always contain various warranties wherein the seller (grantor) warrants the quality of the title to the buyer. A “general” warranty deed provides that the seller will forever warrant and defend the property to the buyer (grantee) against all lawful claims and demands. A “special” warranty deed provides that the seller will forever warrant and defend the property to the buyer against lawful claims and demands of the grantor and all persons claiming by, through and under the grantor. A fiduciary deed is given when the seller is an Executor, Administrator, Guardian or Trustee. Because the estate is in title and not the fiduciary, no warranty is required to be given other than the fiduciary has not encumbered or lessened the title of the property. A quit claim deed conveys whatever interest the grantor has without any covenant or warranty. The Pennsylvania Association of Realtor Agreement of Sale (PAR form) defaults to a “special” warranty deed but the type of seller warranty is negotiable Buyers should negotiate for a “general” vs. “special” warranty deed unless the conveyance is from an estate. Sellers can provide any type of warranty irregardless of the warranty received when they purchased.
- Estate Sales - Work closely with the attorney representing the Estate, making sure the Estate has been opened, letters testamentary or administration have been granted. If the Estate has paid the inheritance tax, request to see a copy of the Notice of Appraisement for acceptance or additional tax due/refund. If the inheritance tax has not been paid, the seller should be prepared to have 1.5 times the amount of the tax due on the sale of the property escrowed by the law firm/title company/attorney for the Estate pending official notification from the Department of Revenue. For years, the custom in Western Pennsylvania was for the estate attorney to provide a “letter of indemnification” for the tax due, however, more recently title insurance underwriters have frowned on this practice.
- Personal Comfort - Lastly, be comfortable with yourself. Buyers and sellers of real estate can become emotionally charged throughout the process. Questions pertaining to the quality of title or with the settlement statement should be referred to our office in advance of closing. The more questions that the realtors, buyers and sellers have, the more answers all will receive thus providing for a successful closing.
Contact any of the firm's attorneys at (724) 935-1400 for more information or use our contact form to send us a message.