The closing process in real estate varies from state to state. In Georgia, we use closing attorney’s to complete the real estate sale. Other states use title companies. Very similar here. The closing attorney does not represent the Buyer OR the Seller in the process, but the lender. They complete all the documents as required by your lender that you sign at the closing. But there is one other “minor” detail they handle. Making sure you get a CLEAR title to the property you are purchasing!
What Does The Closing Attorney Do?
Having your offer accepted can be the most exciting feeling and yet often can be completely stressful at the same time. It is only stressful if the closing process isn’t clearly understood. The closing process is (for the most part) unfamiliar to people. The infrequency of occurrence coupled with the fact that the real estate purchase is often one of the most expensive purchases you make can be very unnerving for all. However, with the help of some basic information and some guidance, the home-purchase and the closing process can actually be smooth!!
During the few weeks (or so) between when your purchase offer is accepted and when the keys are handed over, there are many hurdles to overcome. One hurdle in particular is having a “cloud” on title. Any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property is a cloud or a mark, on title. These clouds are discovered during a title search and need to be resolved prior to closing.
What Is A Cloud on Title?
Kind of think of a sunny day, and a cloudy, overcast day. Which do you like better? Sunny of course!
But when you have a “cloud” on your title, it’s not so sunny. What is a Cloud on Title?
Liens: Liens are the best known encumbrance (or cloud). They are monetary claims against a property to secure an obligation or debt of the property owner. The most common lien is a mortgage. A contractor could also place a mechanic’s lien on real estate for the construction of a driveway until the contractor is paid for their work. Liens for unpaid taxes and court judgments are also common.
In order to be “cleared-to-close”, these liens must be addressed. Some liens can show up on title and in reality not really be an issue at all. What this means is, the lien has been satisfied and paid in full, but the lien-holder neglected to release the lien with a satisfaction and release document. Most liens are mortgages and prior to closing a payoff is ordered and paid at the closing.
For listing agents– it is critical to stress the importance of the seller(s) submitting their “Seller Information Sheet” in order to have these potential issues discovered and remedied prior to closing. The Seller Information Sheet allows the pre-closers to make sure the title is ready for closing.
For selling agents- it is critical to stress patience to the client as the waiting process usually involves the seller submitting their information sheet, the pre-closers requesting payoffs and HOA letters, along with the underwriter and lender working on the preparation of the loan documents required to close.
The real estate transaction is a collaborative group effort. The co-oping agents, clients, the loan officer and the closing attorney collectively work together to fulfill their particular roles. When everyone is on-board and understands what their responsibilities are the closing can result in a smooth and pleasant experience for all parties involved!
We are here to guide everyone through the process to ensure that this happens on each and every closing!!
This information is courtesy of Perrie & Associates, one of our closing attorney firms we have used for our clients.