Real Estate Closings in Florida and Tennessee
Florida's real estate sector contributes a large portion of the local economy due to the continual closing of residential and commercial real estate. While real estate attorneys are well versed in the real estate closing process, most people are unaware of the entire process between the moment a purchase is made and when the contract is signed on the date of closing.
We hope that you will have a better understanding of the primary process in executing a real estate transaction by the end of this read. This way, real estate agents, buyers, sellers, lenders, and any other parties involved will be able to understand the specific actions taken by real estate attorneys to close a transaction successfully.
Submission of the Title Order
Once the initial escrow deposit is made and a purchase and sale contract is signed between both the buyer and the seller, the buyer's lender or real estate agent will then begin the process by submitting a request for title to the closing attorney. Most of the time, this will be composed of a one- or two-page form that contains any relevant information related to the transaction. For example, the buyer's lender or real estate agent may include party names, purchase price, lender information, property description, and existing mortgages. Often, real estate attorneys will also allow this process to be done online through their website. At this point, the buyer’s realtor will also have sent a copy of the signed purchase and sale agreement to the closing attorney.
Processing the File
Once the closing attorney receives the request for title, the processing stage of the real estate transaction is over. Most experienced real estate attorneys will close out the processing stage as soon as possible once they receive the receipt of the request for title since they know other parties must obtain all the necessary documentation in time for the closing date. When processing the file, this includes ordering tax information that proves current and prior-year tax status, homeowner/condominium association estoppel letters proving any assessments or maintenance fees, loan payoff statements, certificates of hazard insurance, and inspection reports. At this point, most real estate attorneys will order the title search report and the lien and judgment search report from both the title insurance underwriter and lien search company.
During the title search phase of a real estate transaction, there will be a thorough search of the public records where the real property is located. These records will include deeds, lis pendens, mortgages, easements, judgments, restrictive covenants, divorce settlements, liens, and any other public record documents that may affect the title of the property. Once all the necessary documents are located, the title insurance underwriter will then prepare a title search report, including all of the documents to send to the closing attorney.
Once the title insurance underwriter’s title search report is delivered to the closing attorney, the title examination process is completed. Based on the information located in the title search report, the closing attorney will first send out a title commitment to the buyer, and if applicable, the lender. Then, the closing attorney will examine all of the documents located in the title search to determine the title of the property, its current status, and if any title clouds need to be cleared before closing. At this point, the closing attorney will also need to verify the legal owner of the property and any debts owed against the property.
As soon as any title clouds have been cleared and both parties are ready to close the real estate transaction, the closing attorney will prepare all the documents to close the transaction. These documents include the deed, affidavits, bill of sale, FIRPTA certificate, and closing statement. It's important to note that if the buyer this financing the purchase, their lender will need to submit their closing instructions to the closing attorney so that they can include all of the lender’s charges, escrows, and fees in the settlement statement. Experienced real estate attorneys will often write up drafts of all the closing documents and send them out to any interested parties in advance of closing so that they can be reviewed and revised if necessary. This way, the closing attorney can be sure that everything is approved before closing.
Closing the Transaction/Settlement
As soon as all of the closing documents are approved, the closing transaction will be scheduled. During the closing transaction, the closing attorney will have to oversee the closing of the sale and purchase transaction and be available to answer any questions either party may have relating to the transaction and closing documents. At some point, the seller will need to sign the deed and other necessary documents, and the buyer will need to sign their respective documents. Then, both the buyer and the seller must sign the HUD-1 settlement statement. Once the closing has occurred, the real estate agents, attorneys, seller, and any other parties involved in the transaction are paid for their part in the real estate process. Then, the final documents are sent to the county's public record where the property is located.
To learn more about the real estate closing process, contact Smith/Barbara today.