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.
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.
A Seller hires a Listing Agent and pays her a commission to sell the property.
Generally, that commission paid to the Listing Agent is then split between the Buyer’s Agent & the Listing Agent at the point of sale.
Circumstances vary however, so ask your Realtor® to be certain you know the facts before making an offer.
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.
Commercial leases almost always have an escalator clause.
The clause builds in an agreed upon future increase in the lease payment amount.
It’s usually tied to a time period (e.g., an annual increase or an increase after 5 years.)
But it can also be tied to other triggering events, so read your lease carefully & make sure you understand when & under what circumstances your lease payment can increase.
Title can be acquired through sale, inheritance, gift, foreclosure or other legal transfer of rights in the real estate.
Title can be held in a variety of ways, including individually or in a legal entity such as a corporation, Trust, LLC, Partnership, etc.
Much of the paperwork related to final closing on a property is to insure that the Title is clear and can be legally transferred.
Title Insurance can be purchased to protect the property owner from any defects in the title that are discovered after purchase.
For example, a financing or mortgage clause is a typical contingency clause in a real estate contract.
With a mortgage contingency, if the Buyer is approved for the mortgage, the contract remains in force and the Buyer must purchase the property (subject to other contract conditions).
If the Buyer does not qualify for a mortgage (after making a good faith effort), then the “contingency” isn’t met, so the Buyer is usually let out of the contract and the deal doesn’t go to conclusion.
Contingency clauses can be structured for the benefit of either party to the contract.
Contingency clauses vary widely from contract to contract and often have completion dates attached to them.
Be sure you understand the specifics of any contingency clauses clearly before signing any contract & get any needed legal advice.
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.
“Grandfathering” often occurs when zoning laws are changed & existing properties or business uses do not meet the new codes but are allowed to continue doing business anyway.
Sometimes this is used to give an existing business a chance to phase in changes caused by a new law or regulation or to mitigate the cost of following the new regulations.
Not all new laws or regulations contain grandfather clauses and, even if they do, the impact can be limited in scope or in time.
So if you think the new law or regulation applies to your business be sure to get proper legal or financial advice.
The content on this site is provided for educational and informational purposes only. It is not intended nor provided as financial or legal advice.