Closing


Also found in: Dictionary, Thesaurus, Financial, Idioms, Encyclopedia, Wikipedia.
Related to Closing: closing time, Closing Sales

Closing

The final transaction between a buyer and seller of real property.At the closing, all agreements between buyer and seller are finalized, documents are signed and exchanged, money passes to the seller, and title to the property passes to the buyer.

Closings generally take place at the office of the title company, which issues title insurance to both buyer and lender. This insurance is issued after the title company has researched the chain of title to the property and cleared any matter that might interfere with a successful transfer of title.

Both the buyer and the seller may be represented by attorneys who review the closing package, which may include more than twenty-five documents and affidavits required by a raft of regulations. The buyer's attorney, if any, also reviews the title company's research to ensure that the buyer receives clear title.

An agent of the title company conducts and facilitates the closing. At the closing, the buyer reviews and endorses all loan documents, which may include the following:

  • the mortgage,
  • the promissory note by which the buyer promises to pay the loan and interest in full,
  • a truth-in-lending statement, in which the lender informs the buyer of the approximate annual percentage rate over the term of the loan,
  • various affidavits and inspection forms,
  • a survey form indicating that the buyer has seen and understands the survey, and
  • a private mortgage insurance application, if required.

The seller also endorses a number of documents at the closing. These may include the following:

  • the deed transferring title to the buyer,
  • a bill of sale transferring ownership of any Personal Property included in the sale,
  • any required affidavits, such as affidavits concerning mechanic's liens or inspections, and,
  • in the case of new construction, a certificate of occupancy.

Among the documents that both the buyer and the seller sign are an Affidavit indicating the source of the funds the buyer is using to purchase the property, and a Settlement Statement showing all the costs associated with the transaction. This statement, required by the Real Estate Settlement Procedure Act of 1974 (RESPA) (12 U.S.C.A. § 2601 et seq.), is required in all transactions involving a mortgage from any lender whose funds are federally insured or regulated. RESPA mandates full disclosure by the lender of all the terms and conditions of the loan, as well as a good-faith estimate of the buyer's closing costs. These may include fees for the loan origination process, credit report, appraisal, title search, survey, and administrative procedures.

At closing, the buyer also pays the contract sale price, minus any earnest money deposited, usually in certified funds; loan discount fees, or points, charged by the lender to obtain the mortgage; and attorneys' fees. The buyer is often required to purchase separate buyer's and lender's title insurance policies, although in some areas this expense is split between buyer and seller.

Once all the necessary signatures have been obtained and the monies have been disbursed, the buyer takes possession of the property. In some areas, it is customary to allow the seller a short period of time to vacate the premises; in other areas, the seller may be expected to move out before the closing. If any disputes arise at closing, the title company may escrow a portion of the funds to settle the dispute later so that the closing can be concluded.

Further readings

Eigen, Ann vom. 1999. "Proposed RESPA/TILA Changes—The Lawyer's Role in Residential Real Estate Closings." Probate & Property 13 (January-February): 32–6.

Gadow, Sandy. 2003. The Complete Guide to Your Real Estate Closing: Answers To All Your Questions—From Opening Escrow, To Negotiating Fees, To Signing the Closing Papers. New York: McGraw-Hill.

Glink, Ilyce R. 1994. One Hundred Questions Every First-Time Home Buyer Should Ask. New York: Random House, Times Books.

Irwin, Robert. 2004. Home Closing Checklist. New York: McGraw-Hill.

closing

n. the final step in the sale and purchase of real estate in which a deed of title, financing documents, title insurance policies, and remaining funds due are exchanged. Some of the final documents, including the deed and mortgage or deed of trust, are then delivered to the county recorder to be recorded. Depending on local practice the closing is handled by a title company, escrow holder or attorney.

References in periodicals archive ?
(https://www.ibtimes.com/victorias-secret-stores-closing-amid-poor-holiday-sales-2769787) Victoria's Secret also announced that it was closing stores, saying that 53 of its underperforming locations would shut their doors in 2019.
* CannTrust Holdings (NYSE:CTST) shares tumbled by 2.48%, eventually closing at $1.97.
In small segments of the industry where e-closings have been occurring up to this point, the process typically involves lenders that provide select title and settlement companies with PDF files that contain the necessary closing documents for a mortgage transaction.
Moorland Primary School: |Wednesday closing at 2pm, Thursday and Friday 9.30am to 2pm.
Jones and Hylick faced the challenges that a multitude of home buyers face at the closing (also called the settlement), the meeting in which the sale of property is finalized.
(3.) The Council viewed Bank as an entity essential to the Bunceton community and was apprehensive that closing the Bunceton location might lead to closure of the city's school.
Even as a young associate, it seemed to me that this "problem" could have been identified prior to the closing with some prudent due diligence and coordination with the various accounting firms involved in the transaction.
Halifax: Average handout: 310p Closing value: 718p Loss per share: -2p Total loss: [pound]43.40
On November 18, 1992, the Internal Revenue Service issued proposed regulations under section 382 of the Internal Revenue Code, concerning the rules for allocating net operating losses or taxable income and net capital gain or loss for the taxable year during which a loss corporation undergoes an ownership change that does not trigger a closing of the tax year.
It defines the sale of all or part of a company when the purchase price is subject to an adjustment based on the results of an audit as of the closing date and/or involves an escrow or a final payment tied to net worth as shown on the audited closing-date balance sheet.
Rural nursing homes are closing and moving to larger population areas where they are likely to be more fully used.
This study examines the effects that institutional and non-institutional unexpected closings of the NYSE have on the dally return of NYSE stocks over the historical period from February 1885 through December 1995, both on the trading days preceding and following the day of an unexpected stock market closing.