The Closing Process

Steps in the Closing Process for a Residential Closing with a Mortgage:
NOTE that for Cash Closings or Hard Money Lender Closings (at least for those lenders who do less than 10 loans per year), the process we are about to describe is significantly simpler.  The parties can eliminate numerous Lender requirements which federal law requires that all Lenders include in the closing.

STAGE ONE:  BEGINNING THE PROCESS
1. Buyer and Seller negotiate a purchase price and sign a Contract for Sale and Purchase, with the help of the Realtor(s).
2. Buyer selects a Title Company to handle the transaction (in Miami-Dade and Broward County) and Seller selects a Title Company in other Florida counties, except when federal law gives this choice to the Buyer.
3. Seller sometimes selects an Attorney to oversee Seller’s side of the transaction.
4. Buyer selects Mortgage Broker and/or Lender, and obtains a Good Faith Estimate (GFE) and communicates the choice to the Title Agent, together with a copy of the GFE.
5. The Title Agent is given a copy of the Contract, and begins closing preparations.
6. Buyer pays Earnest Money Deposit (or First Deposit) to Realtor’s broker, or to Title Company.
7. Buyer hires home inspector and obtains a Home Inspection Report. 
8. Buyer and Seller negotiate any concessions (reduction in purchase price) as a result of the inspection, with the help of the Realtor.
9. If there is a change in the price, an Addendum to the Contract usually is written by either Realtor, (though sometimes the Title Agent or Attorney may do so)  and the signed Addendum is delivered to the Title Agent.
10. Title Agent contacts Lender and/or Mortgage Broker, and obtains an order for a Title Commitment.
11. Lender gives the Buyer and/or Title Agent a list of conditions that need to be fulfilled before closing.
12. Title Agent coordinates the payment of a Second Deposit, if any, into either the Realtor’s Broker’s Escrow Account, or into the Title Company’s Escrow Account.
13. Title Company provides the Lender with estimated Title and Closing Costs, to be used  by the Lender in preparation of the Initial Loan Closing Disclosure.
14. Title Company orders a Survey if a house is being purchased, and a Condo Estoppel Letter if a condominium is being purchased.
15. Title Company orders a Lien Search. (Sometimes a lien search is not ordered for Condominiums.)

STAGE TWO: INVESTIGATION
16. Title Company examines the Lien Search results and verifies if taxes, utilities, waste fees, or other municipal service fees have outstanding balances, and whether there are any open permits or code violations.
17. Title Agent examines the Title Commitment and reveals whether there are judgments in the name of the Seller (or a previous owner), and whether there are Notices of Commencement or Liens on the property because of previous work done to improve the property which remained unpaid.
18. Title Agent examines the Survey, to determine if there are Encroachments, Easements, or other concerns that need to be discussed with the Buyer before closing.
19. If a Condominium is being purchased, Title Agent examines the Condo Estoppel Letter to determine whether there are any past due Condominium Fees or Special Assessments, and sometimes examines the Condominium Documents to determine whether a Parking Space is assigned to be sold with the Unit.
20. Title Company prepares an ALTA form summarizing closing costs, and delivers it to Realtor and Seller and Buyer.

STAGE THREE: DOCUMENT PREPARATION
21. Title Agent helps Seller to obtain a Payoff of any mortgages on the property to be sold.
22. Title Agent helps Buyer, with Mortgage Broker (if the Buyer is not working directly with a Lender), to be sure that all documents required have been submitted to the Lender.
23. Lender prepares all the documents needed for the Mortgage aspect of the Closing.
24. Title Agent prepares all the documents to be signed by Buyer and Seller needed for the transfer of the property, and prepares Final Loan Closing Disclosure, in preparation for Closing. (A the HUD-1 Settlement Statement is prepared if there is no commercial mortgage loan, such as a cash transaction or a private mortgage loan transaction.)
25. Title Company updates the Loan Payoff, if needed, before the Closing.
26. Title Company does an updated Title Search before the Closing, to be sure that nothing new has appeared for this property in the Public Record.

STAGE 4:  CLOSING
27. Title Company schedules the Closing at a time that is convenient for all the parties.
28. Realtor, Buyer and Seller schedule the Final Walk-Through to be conducted just before Closing, to be sure there have been no surprise changes in the property since the Contract was signed.
29. Title Agent receives the final Loan Documents from the Lender, and reviews them with the Lender and Mortgage Broker for completeness and accuracy.
30. Title Agent receives the Lender’s Wire Transfer of Loan Proceeds, and receives Buyer’s Cash to Close (usually in the form of a Cashier’s Check or a Bank Wire Transfer), into Title Company’s Escrow Account.
31. Title Agent prepares payment checks that are part of the transaction, and pays these out of its Escrow Funds.  These payments may include:  1) Seller’s Sale Proceeds, 2) Payment of real estate taxes due, 3) payment of condominium fees due, 4) Payoff of any Mortgage held by Seller, 5) Payment of the Realtor Commission, 6) Payment of any judgments, liens, or agreed repair costs which have been subtracted from the Seller’s Proceeds, 7) Payment to Home Inspector, 6) Payment of any past due utilities, open permits, code violations, or other fees attached to the property, 8) Payment for the Lien Search, 9) Payment for the Survey, 9) Payment of any courier fees applicable, 11) Payment of Recording Fees, Intangible Tax and Documentary Stamps due to the County,  Payment of the Title Insurance Premium to the Underwriter, and 12) Payment to the Title Agent for the performing of the above-listed tasks associated with the Closing.
32. Title Agent conducts the Closing, and assists the Buyer in the signing of all Loan Documents and other Closing Documents, and assists the Seller in the signing of all Seller Closing Documents.

STAGE 5:  POST- CLOSING
33. Title Agent provides a copy of all relevant documents for the parties, and retains a copy of all documents for 5 years after the Closing.
34. Title Agent sends original documents to the Recorder of Deeds office for recording.
35. Title Agent wires the Seller’s payoff amount to Seller’s lender, and receives confirmation that a Satisfaction of Mortgage has been recorded.
36. Title Agent verifies that all payments to all parties have been received and negotiated, then reconciles the closing  and closes the file.


Note that Kelley Roark PA/Esquire Title Associates has a distinct advantage in making the above steps go smoothly, and keeping you up-to-date on how everyone is proceeding through the 32 steps toward a Closing listed above.  All the parties involved—the Buyer, the Seller, the Realtor, the Mortgage Broker, and the Lender—are all given a login name and password at the beginning of the process.  Throughout, when a document is needed by someone, they can upload it directly to kelleyroarkpa.com, and it will be instantly available for everyone to see.  If someone wants to check on whether a document has been received yet (such as a payoff letter, an estoppel letter, lien search results, etc.) he or she can go straight to the website, log in, and see if the document is there, and if it is not, call the party responsible to upload it to see if any help is needed.  Everyone can keep track of what everyone else is doing toward the Closing in real time, as the events occur.  This saves time, miscommunications, and a host of other potential problems.