JORDAN MASIAKOS, P.C. 

You Have Found Your Dream Home, Now What?

        Over the last several months you have seen many homes. You have become tired and frustrated. But as your broker drives you up to the next home on his or her list, you see the home of your dreams. This is the one! You immediately fall in love with it.  You make your best offer through your agent. There are some negotiations and you finally have an accepted offer.

       Although the contract will normally not be contingent upon the engineer’s report, I always tell my clients to hire an engineer to inspect the home before entering into a written contract to determine whether the structural and mechanical integrity of the home is intact. I also advise my client's to have a termite inspection done on the home before the contract is signed to determine whether there is evidence of termites or wood destroying insects, and whether the home has been treated. After the inspection is done there may be some further negotiations, and eventually a written contract is signed by all parties.

      Okay, so now what? Once you have entered into a written contract you will begin the process known as the closing or settlement process. The first step is applying for and obtaining your loan. You must make a diligent effort to apply for a loan. Hopefully, you have already met with your loan officer or mortgage broker, worked out the financial details and have previously filled out the required paperwork to get the ball rolling even before you found your home. This moves the process along quicker. Once you have been approved for your loan by the bank, and you have obtained your loan commitment, your lawyer will order a title search.  A title search is an examination of the public record to determine that the seller is the legal owner and there are no claims or liens affecting the property. The title search will verify that there are no outstanding liens against the property or other potential claims against the property.

      While your lawyer awaits receipt of the Title Report, your bank is taking the necessary steps to insure that all conditions are met prior to closing so that the loan is funded at the time of the actual closing. These include, arranging for an appraisal of the home, and may also include a new survey. You will need to arrange to obtain homeowner's/hazard insurance. The bank will require proof of payment of the first year's premium at the closing or in the days prior thereto.  Hazard insurance offers protection for you and the lender against losses due to negligence, fire, windstorm, and natural hazards. Once all documents are in order and any defects in title are cleared, an actual closing date will be scheduled shortly thereafter. It is important that you complete a final inspection of the house, known as the walkthrough, within 48 hours before your closing. This is your final chance to check for any additional problems or repairs, to make sure that agreed upon repairs have been completed, and to check that the house is in the condition you would expect. If all the requirements are not met by the official closing date, some of the seller's funds can be held in an escrow account until the required actions are completed. You must immediately notify your attorney prior to the closing if there are any major problems upon your inspection.

       A day before closing, (sometimes even on the day of closing), you will be told what your final closing costs will be. You must have enough money to pay these costs on the day of closing.  A certified or bank check is required for payment. Several people will be at the closing representing the buyer, seller, and lender.  A title closer will be there from the Title Insurance Company to ensure that all conditions have been met, all taxes are paid and collected and that the mortgage and deed are recorded with the County Clerk's office. The bank attorney will represent the bank or lender. They will ensure that all documents are signed and properly notarized and will collect any fees that may be due to the lender. The bank attorney shall also prepare a HUD-1 or RESPA (Real Estate Settlement Procedures Act). These are government forms that are required to be completed by the lender that itemize what funds were paid and on whose behalf, as well as the closing costs to both the seller and purchaser.

        Once the closing process has been completed, the keys to the house are given to the buyer. If the seller remains in possession of the home then a possession agreement can be drawn up at the closing or incorporated into the contract to ensure that possession of the home is transferred on time. In the event possession is not transferred, your attorney should include payment to you in a certain amount of money for every day the seller remains in possession after the agreed upon time period.  Once all documents are signed customarily you will receive a Bargain and Sale Deed with covenants against grantor's acts. The original will be taken by the Title closer and will be recorded on your behalf. The recording process is the final step in the closing process. The title company that handles your transaction will complete the recording. These keys should be temporary though. It is common practice to replace all the locks on the home to prevent anyone with duplicate keys from entering the home. The seller may also provide the buyer with other documents such as instructions and warranties for appliances and other major components that are part of the home. I also tell my clients to make sure they obtain any garage door openers and keys to any other doors or gates on the property.

       There are other details of the closing process which are outside the scope of this article and which would be discussed at your initial and subsequent meetings with your lawyer.  I have given you a brief synopsis of the process you will undergo once you find your dream home. If it seems complicated, it is. This is why you should have an experienced real estate attorney on your side whether this is your first or third house that you are buying.

   This article was written by Jordan Masiakos, Esq., and is for informational purposes only. Each real estate transaction is different and you should consult with your lawyer on your individual transaction to ensure that your individual interests are protected.