Buying a home is often the most expensive purchase that you will ever make. With hundreds of thousands of dollars changing hands and arcane terminology being thrown around, it’s understandable that most homebuyers, especially those going for the first time, go to their real estate closing with a fair amount of trepidation. In this three part series, we will try to demystify the real estate closing and make, what should be an important milestone, a memorable, stress-free experience.
WHO: There are two fundamental parties that attend the closing: the Buyer and the Seller. In addition, attorneys and agents for each side will attend the closing. The Closing attorney, the attorney charged with representing the bank—and sometimes the Buyer—directs the parties to sign the many documents. Agents attend to deliver various documents, property, keys, and provide moral support to their clients during the closing process. While there are many people, every person in the room is invested in the same goal: finishing the transaction as smoothly as possible.
WHAT: At base, the closing is a formal meeting to exchange an interest in real estate for something of value (usually money). While this symbolic meeting has its roots in centuries of tradition, the modern closing centers on signing various documents. Some of these documents will be explored in greater detail in Part 2 of this series dealing with the lingo of a real estate closing.
WHERE: If you take a look at your Purchase and Sale Agreement (P&S), you’ll notice that the closing is set to occur at the appropriate Registry of Deeds or the office of the Buyer’s/Bank’s attorney. Why? Several of the documents signed or delivered at closing—the deed and mortgage, for example—must be recorded, that is, they must be given to a state office charged with making a public record of these types of documents so that the rest of the world is on notice that the documents exists. By closing at the registry, it allows the closing attorney to file these documents quickly, allowing future steps to occur more quickly. The secondary location is similarly convenient: the closing attorney often has to make changes to documents, make copies, or make phone calls. By closing at their office, they are more able to make changes on the fly. Additionally, some closing attorneys are able to record from their office using the internet.
WHEN: In that same paragraph of the P&S, you will notice that the closing is set for a specific date and time. Why? Without this level of specificity, often determined months in advance, either party would have a plausible argument that they do not yet have a legal duty to perform—either tender the purchase money or the deed. This date can usually only be changed by formal amendment, in writing, to the P&S.
The basics of a real estate closing reveal a common thread: each facet is an attempt to make the transfer of real estate as efficient and predictable as possible. With this basic knowledge, the uncertainty of a closing can be replaced with the excitement of moving into your new home!
In Part 2 of our series, Learning the Lingo, we will explore not-so-common lingo that is used at the closing table.
Stiles Law is a firm located in Massachusetts concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions.