A last-minute check on whether
you've got everything you need for closing day.
It’s closing day. Your moving van
is packed and ready to go. But you may learn that you will not receive the keys
to your new home, because the closing cannot be completed on that day. While
not everything required for the closing is up to you, as the buyer, to bring,
you can help avoid the frustration of a delayed closing by bringing certain
documents and other items along.
To help remember what to bring
during this very busy day, you might want to create a checklist. Your list will
vary depending on:
- · the type of property: for example, a free standing home, condominium or co-op
- · the terms of your purchase contract
- · the terms of your loan, if you are taking out a loan, and
- · state and local real estate closing rules and customs.
This article lists many of the
common last-minute closing requirements. In some places, your real estate sales
agent, attorney, or the escrow company (sometimes called the “escrowee”)
performing the closing will furnish some or all of the suggested items, so you
should ask before commencing work to attain these items.
For more general information
about your home purchase closing, see Nolo’s article "Home Buyers: What Happens
at the Closing."
Closing Items for All
Purchases—Cash Deals or Loan Transactions
Whether or not you have a lender,
you may need to provide documents to the escrowee. These usually serve to
comply with the terms of the escrow or help the title insurer clear the property
title of liens or other defects that could affect your ownership.
Some of the more common title
clearance items collected from buyers by the escrowee for the title insurer
include:
Photo identification. Your
signature will be notarized on various loan and title documents, so bring your state-issued
photo identification, such as a driver’s license, to the closing — even if your
purchase is to be made solely with your own cash.
Funds. Your attorney or the
escrowee will calculate the amount of money you need to bring to the closing.
You may want to include a small overage as a cushion to cover any unanticipated
closing cost. Recent changes to “good
funds” rules require you to transmit all but minimum amounts to the escrowee by
wire transfer. Do not expect to bring a check, even a certified check, to the
closing without confirming that the escrowee will accept it. Also, request the
wire from your bank a day or two prior to the closing if you can, and give your
bank the date the funds must be received — usually the closing date. Some
attorneys and escrowees ask that the buyer have the funds delivered the day
before the closing to avoid delays, particularly if the closing is scheduled
early in the morning, or the day before a weekend or bank holiday.
Separation agreement or divorce
order. If you are separated or in the midst of a divorce, a separation agreement
or an order from the divorce court could affect your purchase in some states.
Ask your attorney, or the escrowee if you have no attorney, whether you should bring
your separation agreement or any court orders relating to your separation or
divorce to the closing.
Revocable living trust. If you
have a revocable living trust, and wish to designate your trustee as the owner
of the property, you should bring a copy of the trust document to the closing.
The title insurer will want to examine the trust document to confirm that the
trust can hold property and take out loans if a lender is involved. The
escrowee will want to confirm that the proper parties are signing the buyer’s documents.
Documentary or transfer stamps.
Some states, counties, and municipalities have a transfer tax that is satisfied
through the purchase of stamps to be attached to the deed, which is the
document that transfers the property from the seller to the buyer. These may be
called transfer stamps or documentary stamps. Often, at least one or more of
these stamps are the buyer’s responsibility to purchase prior to the closing.
Ask your attorney, the escrowee, or the state, county, and municipal officials
where the property is located whether you must purchase these stamps prior to
the closing, and if there are any conditions that must be met prior to your
purchase. For example: you may need the seller’s signature on transfer
declarations, or the seller may need to allow an inspection of the property, or
all of the seller’s debts to the state or county or all municipal debts (i.e.
traffic violations or other tickets and water or sewer charges) may need to be
fully paid before you can purchase the stamps.
Closing Items for Purchases With
Loans
If you are taking out a loan to
help finance your home purchase, the lender will provide you with a loan commitment.
It describes the terms of your loan and will likely include a list of items
needed to close the loan. Read the loan commitment carefully, looking for what
you are required to do at, or bring to, the closing.
However, the loan commitment
often omits some of the standard or customary documents, or lists them in the
boilerplate. So, if you are taking out a loan, you may also need to bring the
following to the escrowee for delivery to the lender:
Insurance
Homeowner’s insurance
certificate. All lenders will require you to furnish the certificate for your homeowners
insurance in the greater of the amount necessary to cover the replacement cost
of the home or the amount of the loan, and showing the lender as an additional
loss payee. Lenders are particular about how they are named in the homeowner’s
insurance policy, so ask your lender to give you the exact language, and
furnish it to your insurer.
Wind insurance. Your lender might
require a wind rider to your homeowners insurance if the home is located where
there is tornado or hurricane activity.
Flood insurance. The lender will
require flood insurance for homes within a national flood hazard area. You may
want to look into buying flood insurance even if not required by the lender, as
described in “Hurricanes and Flood Insurance: What Homeowners Should Know.”
Earthquake insurance. The lender
may require earthquake insurance in certain locations where earthquakes are
possible, and where the state does not mandate the coverage be part of a
regular homeowner’s insurance policy or provide the insurance from a state
pooled fund. If you must buy private earthquake insurance, review the policy
carefully, and make sure you have chosen a plan with a deductible that fits
your personal financial plan.
For all of the insurance policies
described above, you should also consider the following:
Start date. All insurance should
commence on the closing date.
Insurance for condominiums and
co-ops. If you are purchasing a condominium or co-op unit, the building
management, either the association or a separate management company, will
provide you with a certificate of insurance covering the jointly owned portions
of the property. The certificate must name the lender as loss payee as
described above, so you should provide the exact language provided by the lender
for naming it as loss payee to the condominium or co-op manager. This applies
to all types of insurance required by your lender.
Paid receipts. In addition to the
insurance certificates for all insurance required by your lender, you should
bring evidence that you paid the first terms premium for each policy you are
required to. Pest inspection. Some loans require a wood-destroying pest inspection.
The rules for Veteran’s Administration (“VA”) and Federal Housing
Administration (“FHA”) loans are now less restrictive than in the past, so you
should ask your FHA or VA lender whether a termite inspection will be required
for the particular home you are purchasing.
Septic letter and/or well letter.
If the home you are purchasing does not connect to municipal water and/or
sewers, you may need a septic letter from the local health department. If you
are buying with a VA or FHA loan, the letter may need to contain some specific
language that will be available from the lender.
Judgment or lien release. If you
have a judgment against you from a prior lawsuit, or debt, you may have to
bring a written, signed, and notarized release to the closing. Your attorney or
escrowee can help you obtain this item.
Construction lien waivers. If you
have contracted for improvements on the property, you may have to bring a
contractor's sworn statement and lien waivers to the closing. In some states,
contractors get an automatic lien on the property as of the date of the
contract for the work.
Documentary stamps. Some states
require the buyer to purchase stamps similar to documentary or transfer stamps
(described above) for the mortgage.
Fred Yancy, Realtors LLC 225 Creekstone Ridge, Woodstock, GA 30188 (678) 922-2463
www.FredYancy.com