The Closing Process On a House for Home Buyers and Sellers
Your Closing Journey
There’s a lot that happens between the time a buyer finds a house and the day it belongs to them. To help you better understand what happens during the real estate transaction, let’s walk through the basic steps that occur between the time you have a contract and the time of your closing.
Escrow and Earnest Money
First, the process is kicked off by going into escrow. This starts when the buyer submits their earnest money, which is stored with a neutral third party like Stewart Title.
Title Search
Next, a title search takes place and copies of documents are gathered from various public records. During this time, we review documents relating to the property’s past ownership and location. This can include:
- Deeds (transfer of ownership)
- Security instruments (deeds of trust/mortgages)
- Judgments and liens
- Home Owners Association (HOA) documents (if applicable)
- State, county, city, municipality ordinances/restrictions
Examination and Title Commitment
All information found in these searches will be examined. Any issues arising from the search will be addressed in the preliminary title report or title commitment.
The preliminary title report/title commitment is then issued to all transaction participants so they know the conditions for Stewart Title to issue the applicable title insurance policies requested. The preliminary title report/title commitment is often referred to as “the road map to closing” because it lists all outstanding debts, liens and encumbrances (“road blocks”), as well as any other action needed to be taken by either or all of the parties prior to passing title to the proposed buyers. Additionally, certain exceptions to ownership are disclosed in the preliminary title report/title commitment. Those may include HOA governing documents; city, county and state property usage restrictions; perpetual property-tax assessments; and any applicable restrictions defined in plat maps or other instruments of record.
Title Curative
After the preliminary title report/title commitment is issued, the curative work begins. Curative work is any action that’s necessary in order to eliminate items identified as “road blocks” which otherwise could prevent transfer of title. Examples include paying off any liens against the property or clearing up any newfound problems with earlier transfers of the title.
If these items are not eliminated or released prior to the closing and transfer of title, they will be listed as exceptions on the final title policy and will not be covered. For example, in order to remove a lien, the seller could be required to pay a contractor who, never having been paid, placed a lien on the property.
Document Preparation
During the document-preparation phase, the appropriate forms are prepared by Stewart Title’s escrow and settlement department. These individuals are often referred to as the closers or escrow officers. Depending on the state where the property is located, the prepared documents executed at closing will create the final settlement for the transfer of title.
Some of the forms you can expect to see at closing include
- Real-estate closing documents (seller and buyer)
- Loan-related closing documents (buyer and borrower)
Your title company or lender may request additional documentation from their borrowers. To ensure the closing proceeds in a timely manner, the requested information should be returned as quickly as possible.
Settlement or Closing
At closing, all parties will review and sign all necessary paperwork. The closer or escrow officer will oversee the closing or signing of the transaction to ensure that all requirements are met. After all signatures are obtained and funds have been collected, the closer or escrow officer will complete the remaining steps necessary to finalize the transaction.
Post-Closing Tasks and Recording of Legal Documents
The closing may be over, but our work isn’t yet complete. As part of the post-closing process, our team takes the following steps to finish the transaction:
- We will disburse funds to the designated parties for the charges collected on the settlement statement.
- We will send the original loan-closing package back to the lender, if applicable.
- We will record the appropriate documents with your county, such as conveyance deeds, security instruments (mortgage or deed of trust) as well as any other miscellaneous documents necessary as directed by the contract, the lender or state regulations.
- We will issue the title insurance policies.
- The owner's title policy, if not provided at closing, will be sent to the buyer along with the original recorded conveyance deed.
- The lender title policy will be delivered to the lender along with the original recorded security instrument (deed of trust or mortgage).
Buying or selling a home is an exciting experience and one for which you can never be too prepared. Check out these links to read more about what we can offer you during the closing process:
