This is a third party (not the Realtor© or Real Estate Broker) who oversees processing the final paperwork related to the sale, such as, the deed transfer, mortgage payoff, etc.
Sometimes this person or company is referred to as the Settlement Agent. Buyers and Sellers can also be represented by their own attorneys in the closing process.
Once all the real estate and financing transaction conditions of the contract have been met, the final paperwork can be executed and the ownership transferred. This is the last step in the “closing” process.
It includes the delivery of the deed to the Buyer, signing of loan notes and mortgage (if financed), disbursement of required funds to various parties and any other actions required to conclude the real estate purchase and sale.
A title company researches the property’s title, which is about the ownership rights in the property. It is critical to know who owns the property and if there are any restrictions on transferring that ownership.
A title company looks into the history of the property and confirms the current ownership, the type of ownership (individual, trust, corporate, etc.) of the property, identifies any liens or encumbrances or other “defects” or problems with the title.
Title companies also arrange for Title Insurance for the lender and the buyer. Title companies often handle all the legal filings and paperwork for closing on the property.
This allows time for the agent to market, show and negotiate a deal for the Seller.
As with all contract terms, the length of contract time is negotiable between the Seller and the Listing Broker.
With real estate contracts, contingency clauses typically relate to things like inspection results, the ability to obtain financing, sale of another property or availability of insurance.
Contingencies are agreed upon among the parties to the contract and control what happens under specified circumstances.
As an example, a financing contingency typically lets the buyers out of the purchase contract if they are unable to get a mortgage.
A Title that is marketable is free from any encumbrances or defects.
Some examples of defects or encumbrances are unpaid mechanics liens, judgments, unpaid taxes, or deed restrictions that impact the use or value of the property.
A Title search should be done before closing to insure that everything is in order.
The typical range of commission on the sale of residential properties is between 5 and 7 percent of the sale price, but that is not a given.
Real estate commissions on commercial and rental property transactions are also negotiable.
Real estate commissions are usually split between the Selling Broker and the Listing Broker, but this is not cast in stone either.
There are two types of policies: Lender’s Title Insurance and Owner’s Title Insurance.
The Lender’s Title Insurance Policy does not protect the Owner.
Occasionally, some type of legal claim or issue comes to light after you have purchased your property. If that negatively impacts the clear Title to your property, Title Insurance is designed to protect your financial investment in your real estate purchase.
This tax is usually, but not always, paid by the Seller. Generally, the tax is calculated as a percentage of the gross sales price of the property.
The tax is usually collected and paid at Closing. It can apply to sales of both residential and commercial property and may be tax deductible.
An offer to purchase property usually includes a good faith payment in the form of a deposit with the offer.
This payment is usually followed by a larger down payment amount once the contract is agreed upon.
In some areas, both the initial deposit and the down payment are referred to as earnest money. In some locations, only the initial deposit with the offer is referred to as earnest money.
Typically these amounts are fully credited to the Buyer at closing, unless there has been some kind of default in the contract terms by the Buyer.
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