With the busy real estate season beginning, we thought
this would be a great time to pass along some helpful
hints and friendly reminders of a few small things you
can do to help assure a great closing.
It only takes a minute to call for a free verbal
O&E prior to doing a listing. This assures
that all parties in title are signing off on the listing
agreement and lets you know of any problem (or surprise)
It may be helpful to remember that Ownership and Encumbrance
reports do not include a name search
of the property owner. O&Es reflect only information
recorded against the legal description.
For the most efficient and accurate service, try to
have as much information as possible (address, legal
description, etc.) at your fingertips
before calling for an O&E.
The title company prepares all title and closing
documents based on what is on the contract,
so be sure to double check for accurate
legal description, vesting, etc.
On the contract itself, it's best to print
clearly or even type.
More is better. Including as much
(not as little) information as possible in the contract
(and in the Closing Control Sheet) can save numerous
phone calls back and forth between closer and real estate
agent after the order has been placed.
When buyers or sellers have a common name,
provide a middle initial
and social security number when the
order is placed. Most times, this will solve any issue
before it becomes a problem - those embarrassing judgments
may never even show up on the title commitment to needlessly
alarm the clients.
It is helpful to the title company when the Realtor
can provide Homeowners Association
information, including phone number,
when placing the order.
When doing a tax-deferred exchange, give
as much information as possible to the closing agent,
including the name, phone, and fax number of the Qualified
When writing a contract, try to allow at least five
days for the title commitment deadline. If
the deal goes through counterproposals for several days,
we can protect all parties by changing the deadline
to allow ample time for production and delivery of the
The title company can provide the most efficient service
if they receive a complete legal description
when the title order is placed.
If the last four digits of the seller's social
security number can be provided at the time
title work is placed, it will help when ordering the
payoff (most lenders require it) and will save the title
company having to make a phone call later for this information.
Closing Control Sheets are available from the title
company. Including a Closing Control Sheet
with the real estate contract when the title order is
placed is a great way to avoid those pesky games of
phone-tag. (For example, existing lender, new lender,
HOA, and commission information are not included on
the contract, so the agent ends up being called for
If you need HOA financials, by-laws, and minutes
at the time of listing, call your closer, who will be
happy to help you. Because the process of obtaining
this information can be time consuming, please be sure
to call as soon as you know you will
need this information, preferably at the time
When receiving the first title commitment on
a given order, review it thoroughly
(for accurate spelling, correct sales price, etc.) and
address any issues immediately with the title company.
On any subsequent title commitments, the information
that has been changed will be underlined
so the realtor and their clients can find it quickly.
When you receive the title commitment, one of the first
items to check is the sellers' names.
If one of the sellers is deceased, the title company
might not know unless the death certificate has been
The title company will automatically
give a reissue rate for up to three
years if they have determined that a prior title policy
(from any title company) was issued during this time.
Child support judgements remain attached
to a property or person until they are satisfied.
Real estate agents may want to call their closer
first for available times before confirming
a closing time with their customers.
It is a good idea to let the closer know ahead of time
if you know there will be both a first and second
mortgage at the closing. The closer will be
able to schedule more time and not be late for his or
her next closing.
Remember to schedule any closing with an FHA payoff
prior to the last day of the month.
If we don't get lender funds on the day of closing,
this can delay disbursement of the payoff and an additional
month's interest would be due to the payoff lender.
If the seller has a mortgage in existence, the client
may save money by choosing not to close
on Friday. If a lender receipt of the
payoff funds is delayed by the weekend, the seller could
pay three days' additional interest.
Due to the large volume of closings at month-end, it
may be easier to get your preferred closing time when
you schedule closings at other times of the month. There
is usually no financial advantage to
closing at month-end.
The title company is more likely to get figures
in advance when there is close communication
between the selling agent and the buyer's lender.
Remember that when the lender wires money, it's not
just a keystroke but a 3-4 hour process.
For example, if funds are wired at 2:00 for a 2:00 closing,
chances are the transaction will not fund that day.
A federal tracking number does not
mean the funds are available for closing. By law, Colorado
title companies must have physical funds
in the bank in order to disburse.
The new lender will require evidence of hazard
insurance on the subject property at closing.
If the title company is to hold earnest
money, make sure the check is payable to or
endorsed to that title company. They will immediately
send out escrow instructions directly to buyers and
It is extremely important that the closer have copies
of all addendums to the contract as
well as counter proposals.
When dealing with a foreclosure, ask
your closer for an explanation of how the transaction
will be different. The closer can explain the importance
of dates and time frames and why the title company closes
When there is a private party lender payoff,
the title company will want to look at the original
promissory note, deed of trust, and release prior to
closing. Also, the private party lender must supply
the payoff figures.
Let the title company sales rep or the closer know
in advance of any special needs at
closing - interpreters, blind or deaf clients, if there's
a divorce situation that would require two separate
closing rooms, etc.
If you need cashier's checks at closing,
please notify your closer ahead of time.
The closer is going to briefly
explain each document at closing. They are happy to
provide a complete closing package prior
to closing for those clients who would like to read
through all documents at their leisure. For your convenience,
these documents can be e' mailed.
If a seller has had a name change
due to marriage or divorce, proof of that change will
be required at closing for notary purposes.
If the person's driver's license does not match the
name on the deed, the will need a marriage certificate
or divorce decree.
If time allows, the realtor may want to go over the
settlement statement with the client
prior to closing. Some clients feel
more comfortable asking their realtor questions rather
than asking a stranger at the closing table, and it
may give the clients a greater sense of privacy.
The buyers need to bring certified funds
to the closing table (not bank checks, cash, money orders,
mutual fund checks etc.)
When working with a foreign seller,
the sellers may want to speak to an accountant regarding
the 10% FIRPTA withholding. An accountant
can help them apply for an exemption in advance. Please
notify the closer if you are a foreign seller.
If the purchase price is over $100,000 and the seller
is moving out of state, Colorado has
a 2% tax withholding rule. You may
also want to notify the closer so the withholding tax
amount, if applicable, can be included in the figures.
Remember that buyers and sellers should be on
time for their closing. One person a half an
hour late can create problems not only for the title
company but for all the buyers and sellers who are scheduled
to close after them.
Both buyers and sellers will need
their drivers licenses at the closing,
as well as need to know their social security
The customers may want the Real Property Transfer
Declaration explained to them before closing
so they have a thorough understanding of it.
Reviewing final figures immediately
upon receiving them gives you more time to contact the
lender and address any issues prior to closing.
and other documents
If you need a Power of Attorney,
the title company can provide the form to you. They
prefer to provide this document whenever possible. If
there is an existing Power of Attorney, they must approve
the form prior to closing.
A Personal Representative's Deed must
be prepared by an attorney.
Where there is a Conservator's Deed
involved, the title company must obtain an order from
the court approving the transaction, and the conservator's
deed must be prepared by an attorney.
State law requires that money brought to the
closing must be in the form of "good funds."
Good funds must be a cashier's
check, certified check, or wired funds. Money
orders and personal checks do not constitute good funds
and cannot be accepted.
At the closing table, it's sometimes better to have
the sellers and their agents take a "break"
in the lobby during the loan package presentation.
This allows the buyers more privacy and comfort to ask
questions about some very personal information.
If the sellers had an FHA loan
that was paid off at closing, they can call the U.S.
Department of Housing and Urban Development at 1.800.697.6967
to see if they are eligible for a partial refund
of their original mortgage insurance premium. The Consolidated
Appropriations Act 2005 amended the National Housing
Act to eliminate refunds of the FHA's up front mortgage
insurance premiums for all FHA loans endorsed for insurance
on or after December 8, 2004, except when the borrower
refinances to another mortgage to be insured by FHA.
You may want to ask your closer to make a copy of the
HUD-1 for each buyer and seller to
put in their "Tax Return" file for tax time
the following year.
©1996 By Leonard
Leonard & Associates, Inc. All rights reserved.
Duplication in whole or in part without permission is