Sellers - Closing and Beyond
• Timeline and Paperwork
• Tips for Moving
Closing - or settlement or escrow - is essentially a meeting where the closing agent (the party who conducts settlement) takes in money from the buyers, pays out money to the owner and makes sure that the purchaser's title is properly recorded in local records along with any mortgage liens. All papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties to the transaction to verify their interests. For instance, buyers get the title to the property, lenders have their loans recorded in the public records and state governments collect their transfer taxes.
The closing agent reviews the sale agreement to determine what payments and credits the owner should receive and what amounts are due from the buyer. The closing agent also assures that certain transaction costs are paid (taxes and title searches).
Closing is also the time when "adjustments" will be made. For instance, suppose you've pre-paid taxes four months in advance. In this case, the closing agent will compensate you for the prepayment at closing by having the buyer pay you additional money.
It could also work in reverse. If you are behind on property taxes, the closing agent will reduce the money due to you at settlement by the amount of the unpaid taxes.
Timeline and Paperwork
The Closing Paperwork generally consists of the following documents:
- Deed - A legal description prepared by an attorney to transfer and record, in public records, ownership of property.
- Title Insurance Policy and Certificate of Title - This coverage is issued by the title company after completion of the title search. They check to see if there are any judgments, liens or attachments that need to be taken care of to `clear' the title. After checking on unpaid taxes and assessments (e.g., sidewalks or sewer), the attorney provides a certificate of title to the lender and the buyer.
- Homeowners' Insurance Policy - New home buyers must obtain a binder for new coverage on the home, and the seller is generally required to keep the property insured against loss or damage prior to the Closing to protect the new buyer's interests.
- Mortgages - The mortgage contract gets recorded to protect the mortgage lender's interests. When a mortgage is paid off (also known as 'satisfied'), the home buyer will receive a copy of the ``satisfaction of mortgage" which is a document that indicates that the mortgage has been paid in full.
- Property Tax Bill - Many homeowners will supply a copy of their property tax bill to the home buyers; if not, a copy can be obtained from the town or city hall Assessor's office.
- Warranties and Service Records - Home buyers appreciate these records, if available from the home sellers, as they can aid in obtaining satisfaction if a product or service fails within the given time or usage limits. It is also helpful to know what service people the sellers have used in the past as they experience, sometimes for the first time, the maintenance of a home (furnace cleaning, snow plowing, plumbers, etc.)
- Plot Plans and Surveys - An up-to-date survey will be required for the closing. You can look up a the current plot plan at the town hall and obtain a copy for a nominal fee.
- Water and Sewer Bills - Proof of payment by the seller will probably be required for the Closing.
- Utilities Records - Homebuyers generally arrange for services to be changed the day of or day after your Closing. Check with each service provider to determine how they handle requests and what is required for final readings and new service setups.
Tips for Moving
Whether you have moved once or a dozen times, it never seems to get any easier. Here are some hints that we hope you will find helpful as you prepare for moving day.
- Make agreements with buyers about possession of the home and moving date. Having sellers and buyers meet on the front walk - each with a house full of furniture - is not a happy situation.
- Start planning early. Once you are confident that you will be proceeding with the sale, start weeding out your current possessions. Toss (or give away, sell at a yard sale, or on-line) things that you don't want to move.
- Make a list of any important items you will need to buy for your new house. Examples: draperies, blinds, shower curtains, etc. Having these things with you on the day you move in prevents unnecessary surprises.
- Start packing early. Anything that you are sure you will not be using before moving day should get boxed.
- Mark every box and carton. Again, it makes it much easier if you need an item before you move, and makes it much simpler after you move. Unpacking will probably be somewhat of a gradual process--this way you know where the most necessary items are located.