Contracts & Closings

CONTRACTS
The Contract stage of the sale transaction is analogous to laying foundation for building a house. If the Contract is properly prepared, your closing will go smoothly and both the Buyer and Seller will be happy and feel good about the transaction they have concluded.

The condition and requirements for each type of sale and loan differ. You should utilize and complete real estate contracts WITH CAUTION AND FULLY UNDERSTAND YOUR RISKS. All of your rights and liabilities are irrevocably established when the Contract is signed. (Consulting a licensed real estate broker or real estate attorney prior to signing may be prudent.)

The Contract MUST contain all of the agreements between the Seller and the Buyer; furnish all of the terms and conditions to be included in any purchase money note and mortgage; explicitly delineate closing costs, prepaid expenses and clearly provide who will pay each of these; clearly define and/or limit the Seller’s warranties as to the condition of the property including the roof, electrical, plumbing, heating and air conditioning systems; provide for the Purchaser’s right to have an independent inspection performed; include or omit a provision for prorating taxes, insurance interest and rents; provide for disposition of the escrow account; provide for a closing date; provide for a possession date; provide for the disposition of any existing loan; deal with the Seller’s release or non-release of liability on the existing loan; provide for termite letter if required by lender or Purchaser; provide for disposition of surplus in escrow account; provide for “Guaranty Mortgage” if required by Seller; describe all items to be conveyed under the Contract; provide for transfer or cancellation of existing homeowners insurance; include all spouses’ names on Contract; provide for Seller’s right to continue marketing property if applicable; provide for contingency for sale of Purchaser’s existing home if applicable and sometimes other items dependent upon circumstances.

In addition to the contract, the state of Florida requires all residential sellers to provide several property disclosures to the purchaser prior to acceptance of a real estate purchase contract. These property disclosures cover the condition of the property including known defects, homeowner’s association specifics and the existence of lead based paint.

CLOSING
In Florida, real estate attorneys handle the closings and represent the lender assuming it is not an all cash deal.

The following is a sample checklist of items that need to be performed in preparation for closing by some combination of the buyer, seller and closing attorney.

ON ALL SALES

• Provide closing attorney a legible copy of signed contract with all revisions.
• Provide closing attorney the name and address of every mortgage company (including loan number) or individual who holds a mortgage on the property being sold.
• If required by contract or lender, order Wood Destroying Organism (WDO) inspection and have WDO report forwarded to closing attorney.
• If desired or required by buyer, order the structural inspection and negotiate repairs based upon the 3rd party inspectors report.
• Arrange for or make sure borrower arranges for a homeowners insurance policy. Provide closing attorney the name of agent and the amount of premium as soon as possible and have the policy binder forwarded to the closing attorney.
• If the seller is paying off an FHA loan, provide the existing mortgage holder at least 30 days written notice of the seller’s intent to prepay. o Coordinate the transfer of utilities between the buyer and seller.
• Coordinate the date of possession and any provisions concerning rental of the house by the seller from the purchaser until the seller vacates the house.
• Coordinate the closing date, time and place among the seller, buyer, closing attorney, mortgage company and any real estate agents involved.

The buyer should bring the following to closing and ensure certain criteria are met:

• Cashier’s check payable to the Closing Attorney for the funds required for closing.
• Original and one copy of endorsement of new homeowner’s or hazard insurance policy naming all existing mortgage holders.
• Drivers license, state issued identification card or passport for each individual that is to be on title. 
• Walk the property, prior to closing, to ensure that any required repairs have been made and that the property is in acceptable condition.

The seller should bring the following to closing and ensure certain criteria are met:

• His/her copy of the insurance policy if it is being transferred to the buyer.
• All keys to the house, including garage openers if applicable.
• Warranties and manuals to all appliances.
• Ensure the FHA or VA final inspection has been ordered and the property has passed final inspection if applicable 
• Make sure all discrepancies and repairs required by FHA, VA or FNMA have been corrected.
• Make sure all repair items required per contract are made.

Real estate attorneys and real estate agents openly agree that quality Contracts coupled with professional Closing Management and Coordination separates the true professionals in the real estate business from the hacks. There is no substitute for a well written contract and smooth closing, and nothing more frustrating than a deal that falls apart because of a poorly written contract or sloppy closing management.

Engaging professional assistance with this can be invaluable to your transaction. These services are available from attorneys, title companies and real estate professionals. To learn more about these types of services, check out Contract Writing and Closing Management from Capstone Residential.

 IF YOU HAVE ANY QUESTIONS REGARDING ANY ASPECT OF THE CLOSING, IT IS IMPERATIVE THAT YOU DISCUSS THIS WITH THE CLOSING ATTORNEY OR MORTGAGE COMPANY PRIOR TO THE CLOSING!