The real estate closing process, also referred to as ‘settlement’ or ‘escrow,’ is the final step in the property buying process. Once it’s complete, the property is officially in your ownership.
Before entering a deal, it is essential to have a thorough knowledge so you are sure to complete a smooth and efficient transaction. Here is a compilation of the basics from our real estate law firm.
Legal Definition of Real Estate Closing
Once a property seller officially accepts the offer, a purchase agreement is made, and a closing date is scheduled. The property ownership is formally transferred from the seller to the buyer on closing. After the documents are signed on the date, the buyer owns the right to move in.
Closing Documents Required
The seller signs a ‘Warranty Deed,’ which is a document that transfers the ownership rights to the buyer. The form is recorded in the county’s public records where the property is located. It confirms certain warranties by the seller onto the buyer.
Or, the document can be a ‘Quit Claim Deed’ where the seller transfers real estate without warranty.
Below is the list of other vital documents you need:
- Bill of Sale to Transfer Personal Property (applicable to residential property)
- Property Taxes Agreement
- Power of Attorney
Ensure to rely on your real estate law attorney to understand the purpose of each document and what you need to expect from them.
Preparations to Make
A brief account of the basic steps followed in real estate transactions in Florida:
1. Contract agreement
Both parties sign a sales contract that includes comprehensive and transparent terms and conditions governing the transaction.
2. Deposition of money
The buyer deposits earnest money into an escrow account for a safe and secure transaction.
3. Application for a home loan (optional)
Most buyers apply for a home loan finance complete or part of the purchase. This step involves additional documents, including proof of income and title insurance requirements, among others.
4. Appraisal & inspection of the property
The lender requires an appraisal of real estate value followed by an inspection by the buyer to ensure the property is in a sealable condition.
5. Submission of the title order
A request is submitted to the real estate law attorney chosen by the buyer. The lawyer conducts meticulous title examinations and drafts a final title insurance policy to protect the buyer from hidden title problems.
6. Acquiring insurance policies
Every real estate law firm in Florida highly regards the insurance policies for flooding and windstorms in the region. Lenders also ensure that the buyer acquires the policies depending on the property’s location.
7. Preclosing inspection
Before closing the deal and signing the final paperwork, it is advisable to perform a thorough inspection of the property once again. It ensures that the property is still in the same condition as inspected before.
8. Closing the transaction
At the closing date, the buyer’s real estate law attorney oversees every aspect of the transaction and answers the queries of both properties (if any). Several closing documents, including the names mentioned above, are signed and executed.
9. Money transfer
After the lender reviews the signed loan package, the buyer receives authorisation to transfer the money from the escrow account to the seller’s account.
10. Post-closing matters
After the final closing, specific documents are sent for public records. Original mortgage and other loan documents are sent to the lender. When hiring the services of a real estate law firm, all the post-closing matters are also handled by them.
Updates to Real Estate Closing Law in Florida
- The HUD-1 Form is no longer used for a residential purchase transaction involving a federally insured mortgage.
- The Truth in Lending Disclosure Statement (TIL) and the Good Faith Estimate (GFE) is replaced with two new forms.
- The two new forms include ‘The Loan Estimate’ and ‘The Closing Disclosure.’
For detailed information, contact an experienced real estate law firm.
We Can Help You Close a Property Deal Successfully
It is not mandatory for the buyer or seller to hire a real estate law attorney to close a residential property in Florida. However, real estate transactions involve complex investments and intricate details. Therefore, we recommend taking advice from qualified lawyers who scan through every minute detail to act in your best interests.
At Hale Law Service, our Board Certified lawyers help you through the process with professional guidance and resources to help you close the deal in a risk-free and timely manner.