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The Closing Process

Closing (or settlement as it is known in some parts of the US) represents the final stage when transferring title to real property from one person to another. The closing date is set forth in the real estate contract, executed by both parties, and usually takes place several weeks subsequent to the contract's effective date.

At closing, the parties will execute a number of documents, prepared by their closing agent, including the deed (a.k.a the instrument of conveyance). The deed is a legal instrument used to convey certain rights an individual has to property to someone else. Deeds come in various forms. The most commonly used deed is the warranty deed. With this type of conveyance, the grantor (seller) fully warrants that the title to the real property is free and clear of all liens and encumbrances and will defend against the lawful claims of all persons whomsoever.

Ownership is officially transferred when the fully executed (and notarized) deed is delivered to the buyer and recorded in the official records in the office of the County Recorder of the county in which the property is located. The closing will be conducted in accordance with instructions provided by the parties (the real estate purchase and sales agreement) and the lender, if there is one. Both state law and custom dictate the methodology and process of closing. Several things happen during closing:

• The buyer(s) and/or lender(s) will deliver funds (generally in the form of a Cashier's check or wire transfer) for the balance owed on the purchase price.
• The seller(s) (grantor) will deliver the executed and notarized deed to the buyer (grantee).
• The instrument of conveyance, together with all other documents needed to perfect the transfer of ownership, will be recorded in the official county records.
• The attorney agent or licensed title insurance agent conducting the closing will issue an owner's and/or lender's policy in favor of both buyer and/or lender.
• The buyer/borrower and seller will pay closing costs, as shown on the uniform settlement statement (HUD-1), provided to them at closing. See also borrowers closing costs.
• The seller receives proceeds, less closing costs and mortgage payouts, in connection with the sale.

• The Closing Process Explained, (Test Your Knowledge)
• The HUD-1 Expalined,
• Finding a Local Title Company, Glossary of Title Terms
• Why You Need Title Insurance,
• Should You Refinance?

See also RESPA