Real Estate Closings, Title Work and Timing

Timing is Everything: part 1

Closings in real estate are different than most sales closings. Closings are a formal process in the world of real estate. Closings occur at an attorney’s office by appointment, not as a spontaneous act. While in other industries, the sales close may happen at the cash register or in a back office on an immediate buying decision, real estate closings require a minimum of 48 hours to setup and often can take up to four weeks. You should begin planning a close several days to weeks in advance of the actual date for closing. Each party should be notified at the proper time in order to have all of the necessary pieces come together at the appropriate time. Think of a closing as cooking a meal. You must know how much time in advance to start preparing each dish or all of the food will not be ready when it is time to eat.

Lenders are the most common reason for delaying a closing. The paperwork that they prepare does not usually take more than a few hours to put together, but they often request documents from the attorney, buyer, and insurance agent. The time spent going back and forth between the lender and the other parties is what can push a back a closing date. The best way to ensure that a lender will be on time is for you to know in advance what they will need and make sure that it is easily available to them. As we discuss the other parties to a closing there will be specific references to what you will need to do in advance so that the lender is not waiting.

Title Work is the actual report from the attorney when they go to the county courthouse and review the ownership documentation. The attorney looks to see who is the legal owner and what liens (mortgages, construction liens, unpaid tax liens, etc) are held against the property. He then brings this information back to his office and writes up a Title Report listing everything that he has found. Often attorneys will refer to a title as clean if there are no surprises. If something comes up the report is referred to as clouded and the problems must be addressed in order to continue with the closing.

Order title work as soon as possible. Title work can take two to five days to get back and if the title is clouded it can take several more days to clear up the problems. You should order title work the day that you sign a contract. This gives you the most time possible to fix any problems that may arise and guarantees that the lender will have the title work as soon as they request it. We have seen numerous agents miss their closing dates because they forgot to order title work until a day or two before closing. The attorney could not get everything together on such short notice and the lender needed a few extra days because they did not have the title work to review. One agent set up a closing with an out of town seller that had to purchase airline tickets to come to the closing. Two days before closing, when the agent remembered to order title work, they found out that the closing date needed to be pushed back a week. The seller’s tickets were nonrefundable, and needless to say, they were not very excited.

Because title work often comes back clean in a couple of days, agents commonly make the mistake of waiting to order it until the last minute. Do not make this mistake. Order title work as soon as possible.