The Basic Steps of Closing
STEP 1 STARTING THE PROCESS
A sales contract is signed by the buyer and seller and delivered to the closing agent, usually with a deposit check. The escrow is accepted by
the escrow agent, often by written notation on the contract. The escrow agent starts the closing process by opening a title order. The file begins to be processed. Tax information, loan payoffs, survey (if necessary), homeowner/maintenance fees, inspections/reports, and hazard and other insurances, as well as legal papers are ordered. A title search is ordered.
STEP 2 TITLE SEARCH AND EXAMINATION
This is a search made of the public records. Records searched include deeds, mortgages, paving assessments, liens, wills, divorce settlements and other documents affecting title to the property. Title examination is the examination of the documents found during the title search that affect the title to the property. This is when verification of the legal owner is made and
the debts owed against the property are determined. Upon completion of the search and examination, a title commitment/ preliminary report is prepared, reviewed and sent out to interested parties.
STEP 3 DOCUMENT PREPARATION
The closing agent reviews the new lender’s instructions and requirements,reviews instructions from other parties to the transaction, reviews legal and loan documents, assembles charges, prepares closing statements, and schedules the closing.
SETTLEMENT OR CLOSING THE TRANSACTION
The escrow or settlement agent oversees closing of the transaction. The seller signs the deed and closing affidavit. The buyer signs the new note and mortgage. The old loan is paid off. The seller, real estate agents, attorneys and other parties present at the closing of the transaction are paid.
STEP 5 POST-CLOSING
After the signing has been completed, the escrow or settlement agent will forward payment to any prior lender, and pay all parties who performed services in connection with your closing (if they have not been paid). The transaction documents are recorded in the county in which the property is located. Title insurance policies are prepared and sent to the new lender and to you. This all happens without any further actions by the buyer or seller.
What is a Fee Attorney?
A Fee Attorney refers to a lawyer who has entered into a contractual relationship with a title insurance company, or an agent of a title insurance company, to close real estate transactions on its behalf in exchange for a portion of the title premium. In Texas, title insurance premiums are established by the Texas Department of Insurance and must be charged as promulgated. Other states allow for a range of premiums or even complete discretion on the part of the insurance company as to what is charged.
The business of title insurance consists of three basic functions: a title search, closing the transaction (escrow), and issuance of a title policy or policies. A Fee Attorney performs the closing function. Most all title companies (the agent) or title insurance companies (the underwriter) also have their own employees who handle closings. For the public, it is often hard to tell whether a title closing office is a company owned office or a Fee Attorney office. An attorney who is directly involved in his or her Fee Attorney operation can be a valuable resource for parties seeking guidance or expertise on certain title or closing issues.The Fee Attorney may prepare a contract and advise the buyer on certain issues. The Fee Attorney would also suggest that the transaction close at the Fee Attorney’s office. The seller may need assistance with title curative matters or need a deed prepared, and a lender may need loan documents prepared. The Fee Attorney can perform all of these functions if the situation allows.