After blogging weekly here at BREN for three years, Sam Schneiderman, Broker-owner of Greater Boston Home Team, now posts here on the first Monday of each month. Today, Sam discusses the issues involved when lenders disregard buyer’s contract dates for mortgage commitments:
Good closings are anti-climatic. Buyers and sellers sign papers, attorney records the deed and mortgage(s) at the registry of deeds, buyers move in and live happily ever after. It seems simple, but...
...to have a good closing day, many people have to do many things perfectly. The closing attorney must resolve any title problems. Buyers must obtain the correct funds to close. Sellers must pay all property-related financial obligations at closing. Attorneys need to have an accurate settlement statement with these items plus all closing costs, including any brokerage fees, title and insurance fees, escrow funds and other amounts needed to close. Figures are collected from multiple sources and must be accurate.
The figures must be approved by the buyer’s lender before they deposit the mortgage funds in the closing attorney's conveyancing account so that she can pay off the seller's obligations and pay the balance, if any, to the seller. (With short sales, the seller’s lender(s) must also approve the numbers.) The entire financial transaction is ultimately presented on a HUD-1 settlement statement that buyers and sellers must sign at closing.
Aside from the financial pieces that fit together, the seller may have to complete repairs which the buyer's lender may want to inspect before closing. At the final walk-through, the property should be as it was at the home inspection. Unless the parties agreed that tenants, sellers, or their belongings can remain in the house after closing, they need to be off of the property along with their trash. Not all sellers get this.
Although most closing days go off without a hitch, some don't. Here is a partial list of some closing day surprises that I’ve experienced:
- movers scheduled for 8am the day of a 10am closing (more common than you think)
- sellers decided to stay for two more weeks. They said that moving is stressful and they needed a few weeks to move out.
- houses full of trash, furniture, etc. (I once opened a closet and a cat jumped at my face.)
- title search reveals problems that need more time to resolve
- lenders or closing attorneys couldn’t complete settlement statements on time, which delayed the buyer's ability to obtain closing funds on time
- 30 minutes before closing, the state attached a property because the seller owed $30,000+ in child support. Closing delayed 10 days while state figured out exactly how much was owed.
- sellers removed shrubs, chandeliers, refrigerators, whatever, that should have stayed
- water heater malfunction flooded entire condo 5 days before closing
- mortgage documents were not correct at closing
- sellers movers damaged walls
- insurance policy was not correct
- sellers/builders realized that their property was worth more by the time they closed and became uncooperative hoping that buyers would back out so they could resell the property for more.
By the way… all of the transactions above closed.
Good, experienced agents and attorneys can help avoid many problems, but unpredictable mistakes and misunderstandings happen. With that in mind, buyers and sellers should remain as flexible as possible and avoid scheduling anything else for closing day.
- How did your closing day go?
- Do you have a good closing story?
The author is solely responsible for the content.