Step One - The Agreement
In the purchase of a home, land or investment property, the parties should enter into an Earnest Money Contract. These Contracts are typically drawn up by attorneys or realtors, and the terms can vary depending on the agreement of the parties. The Contract will detail the agreement between the parties and determine the guidelines for the closing of the transaction. The Contract also gives instructions to the title company as to who pays for what fees and any reservations or special instructions to be contained in the legal documents that will be signed at closing. The Contract gives specific instructions on the type of transaction, and if a new survey is to be done. The Contract is the agreement between parties to sell property and it survives the closing as a legal and binding document.
*Note: If there is no Earnest Money Contract or this is a Refinance or New Construction, the process begins with the title search in Step Two below.
Step Two - The Title Search/Title Commitment
Once prepared, the original Earnest Money Contract should be delivered to the title company with the earnest money deposit to be receipted. The title company will then open title, do a title search, and order tax certificates on the subject property.
After the title search is completed, it is examined by the examiner and a Commitment for Title Insurance is prepared. A copy is mailed to all parties involved, including the Real Estate Broker or Agent, the Lender, the Buyer(s) and Seller(s) if applicable for review. For more information on your title commitment please see “Understanding Your Title Commitment”
on our Resources
Step Three - The Pre-Closing
Prior to closing, there are often a number of requirements that must be met. The Commitment for Title Insurance should be reviewed by all parties, and all title matters listed on Schedule "C" of the commitment must be resolved. Additionally if there is a Lender involved, all of the Lender’s requirements must be satisfied. The Buyer and Seller must also comply with all the terms of their agreement, including inspections, repairs, surveys, etc. If the Seller has a previous Lender, payoff figures must be obtained, and if a new survey is done, it must be reviewed by the title company.
Once all of these matters are resolved the closing can be scheduled. Closings are usually scheduled by the Real Estate Broker, Agent or Lender. The Buyer or Seller of a transaction usually schedules the closing when a Real Estate Broker, Agent or Lender is not involved. The closing is scheduled when it is most convenient for all parties, so that all may attend. It is best for all parties be present at the closing, however, in some instances exceptions may be made.
Once the title company has received all of the lender’s closing instructions and loan documents, we will prepare the settlement statement (or HUD-1) which details how much money should be brought to closing and how funds will be distributed at closing. NOTE: Guaranty Title Company MUST receive the lender’s instructions and loan documents, as well as all other invoices for bills to be collected at closing by 3:00 pm CST on the day before closing. If these are not received by 3:00 pm CST, the closing will have to be rescheduled.
Once the settlement statement is prepared, it must be sent to the lender for the lender’s approval. Time permitting, copies of the lender-approved settlement statement will be provided to all parties to the transaction, including realtors, mortgage brokers, builders, attorneys, etc., the day before closing.
Step Four - The Closing
Your transaction is closed by a experienced closer and documents are reviewed and signed at this time. For more information on the person handling your closing please see “Notice Regarding Your Closer”
on our Resources
A Photo ID must be brought to closing by the Buyer(s) and Seller(s), or Borrower(s) to verify the identity of who is signing the legal documents. Also, the Seller(s) will be required to provide a Social Security Number at closing. There may be other items such as proof of insurance, needed at closing when a Lender is involved.
Certified funds MUST be brought to closing, made payable to Guaranty Title Company Escrow Account. Certified funds are listed as cashier's checks, cash or wire transfers, certified checks, or teller's checks. A title Company cannot accept personal checks or credit union checks that do not have "Cashier's Check" printed on them for amounts over $1,500.00.
At the closing, all documents are signed and notarized, and copies are given to the parties involved. If a lender does not attend closing, copies of documents are faxed to them to obtain funding approval.
Step Five - Funding
Depending on the lender, sometimes it may take hours or even days for the lender to authorize the title company to disburse the funds. Until then, the title company will hold all signed documents and monies in escrow. Once all funds are received, and a funding number is obtained if needed, an Escrow Officer disburses the funds and the legal documents are recorded. At this time, the sale is completed.
The final Title Policy and recorded documents will be mailed to the Buyer(s) or Borrower(s) and Lender if applicable, within 90 days.