Your closing explained
Whether you're buying or selling a home, it's an exciting milestone – and we appreciate the opportunity to be part of the process. To ensure you have all the information you need to understand the transaction process, we’ll walk you through each phase of the escrow process, from the time your order is opened through your closinng and beyond.
Upon opening the order for a transaction, we deposit the earnest money into our escrow account.
We immediately conduct a tax and title search:
- Tax Search – We’re determining taxes owed on the property and contacting the various assessors and collectors, including the city and county. Certain taxes are prorated based on the time of year the closing takes place. A listing of the taxes paid and outstanding, if any, is listed on the title commitment that is sent to your real estate agent.
- Title search – We're gathering copies of documents related to the property’s ownership history and interests, such as:
- Deeds of trust (mortgage)
- Applicable addendums
- Homeowners’ association documents
All of the information found in these searches will be examined and, any issues arising from the search that need to be addressed prior to finalizing the transaction will be addressed in the title commitment.
After gathering all necessary documents during the tax and title searches, the title examiner reviews the applicable title information to verify ownership of the land, whether there are any defects in or claims against the ownership, and whether any action is needed to ensure title to the property can be cleanly transferred at closing. We're also verifying any debts owed and encumbrances on the land.
With that information in hand, the title commitment is issued. It provides the conditions for Stewart Title to issue a particular type of policy. It lists the title defects, liens and encumbrances that would not be covered if the title policy were issued as of the date of the report. This preliminary report provides an opportunity to request actions to remove any objectionable items.
After the title commitment is issued, it’s time for curative work to be done. Curative work comprises the action necessary to eliminate any issues brought up in the commitment that would prevent a clean transfer of title. Examples include paying off any liens against the property or clearing up any newfound problems with earlier transfers of the title such as heirs of previous owners who never relinquished their property rights.
If these items are not eliminated or released prior to the closing and transfer of title, they will be listed as exceptions on the final title policy and will not be covered. (For example, the seller could be required to pay a contractor who placed a lien on the property so that the lien would be removed.) Our objective is to clear any title issues as soon as possible to convey property with a clean title to the purchaser.
During the document preparation phase, the appropriate forms are prepared and will be signed at closing and settlement for the transfer of title, or the formal transfer of ownership (commonly referred to as the closing). Some of the forms you can expect to see include:
- Closing disclosure (or settlement statement if a cash transaction)
- Settlement statement
- Warranty deed
- Title company disclosures and closing documents
Lenders may request additional documentation from their borrowers. To ensure the closing proceeds in a timely manner, the requested information should be returned to them as quickly as possible
At the closing or signing, all parties will sign the necessary paperwork. An escrow officer will oversee the closing of the transaction to ensure all requirements are met.
As part of the closing process, we’ll review each document and obtain signatures from the buyer and seller on all appropriate paperwork. After all signatures are obtained, funds will be collected, and the seller, real estate agents, attorneys, surveyors, title company and any others performing services for the buyer and seller will be paid once funding authorization is received and the requisite documents have been recorded.
The closing may be over, but our work isn’t done yet. As part of the post-closing process, our team is taking the following steps to close out the transaction.
- We will disburse the funds to the designated parties for the charges collected on the settlement statement.
- We will send the original loan closing package back to the lender.
- We will record the appropriate documents such as the warranty and mortgage deeds.
- We will issue the title insurance policies.
- The original warranty deed and owner's title policy will be mailed to the buyer, while the original mortgage deed and mortgage title policy will be mailed to the lender.