You have finally reached a deal to buy or sell your home, and you’re eager to get to closing. Then your attorney/closing agent tells you that will happen in approximately one month.
Why, you wonder, does it take so long?
Banks Are the Biggest Holdups
When a buyer takes a mortgage, the closing timetable is set by the lender, which is often thirty days. If the buyer is participating in a special first-time homebuyer mortgage, or is getting a loan from the Veterans Administration housing program, the process takes even longer.
To prevent extra delays beyond this timetable, it is crucial that buyers apply for their mortgage as soon as the contract is signed. They should also respond right away to subsequent lender requests for documentation.
Even better is to anticipate these requests before they happen, by gathering up information you know the bank will need, such as recent paycheck stubs or W2s, bank statements, tax returns, and divorce or bankruptcy decrees if applicable. Be sure to keep copies handy when you submit the documents; inexperienced loan officers misplacing your information is a common cause of extra delays.
Lien Letters and HOA/Condo Approval Also Take Time
As soon as I am sent a contract for a client’s real estate closing, my office looks for open liens on the property, such as tax liens or those by unpaid contractors, in order to close them as soon as possible to remain in the contract’s timetable.
Depending on the location of the property, we also request a letter from the city stating the property is clear of its liens, for such things as open permits, water bills, code enforcement violations, and the like. Getting an all-clear lien letter from the city is an important way buyers and sellers are protected from later surprises; unfortunately, it is a step some title companies chose to skimp on.
If the sale requires the approval of a homeowners association (HOA) or condo board, this also takes time, as some communities review new owner information only on a set schedule. Again, buyers can prevent additional delays by submitting the required information to the property’s management company quickly.
Major Problems That Cause Long Delays
Sometimes, a substantial problem turns up during the escrow process that can cause significant delays to a deal. My office works to fix these problems as quickly as possible.
When we do a title search, for instance, we sometimes discover a “cloud on the title of the property,” which is lawyer-speak for a defect in the chain of ownership of the home. This might mean that the prior closing agent accidentally included the wrong legal description on the deed, or perhaps a deceased owner’s estate wasn’t properly probated.
To clear the title, we might need to find a prior owner and have them re-sign the deed, or we might have to go to court to ask a judge to approve a legal fix.
Another cause of significant closing delays is an appraisal that comes in below the sales price. Banks won’t lend money for a home that doesn’t appraise at the contracted price. This low appraisal typically causes negotiations between the buyer and seller to re-open, so they can reach a new deal the lender will approve.
And if the home’s inspection (which should be ordered as soon as the contract is signed, one of the most important steps a buyer takes) reveals repairs that must be done according to the contract’s terms, this can also push back the schedule.
Smaller Problems That May Tank the Timetable
Buyers and sellers can do their part to keep the process moving during the escrow period, and to avoid the unnecessary delays I see too often in my practice.
- The buyer should quickly clear any debt that must be paid as a condition of your lender.
- The buyer must ensure that the full amount of money which must be brought to the closing is properly wired from your bank beforehand. (No closing agent will take a personal check, and many no longer take bank cashier’s checks due to increased fraud.)
- Homeowners insurance should be arranged well before the purchase is complete.
- And, for both buyers and sellers, if they plan to change their marital status before the closing, they must notify their attorney/closing agent right away, since marital status is listed in the documents and in the deed.
Buyers and sellers who are careful to do every required step quickly will find their closing happens within the contract’s timeframe. But with all the actions that must be taken by the parties, by the bank, and by the attorney/closing agent, it is clear that a month is a reasonable period to wait.
Having the Law Office of Gary M. Landau by your side during each step in a probate, will/trust, or real estate matter helps insure that the process goes as smoothly as possible. The Law Office of Gary Landau is located in Coral Springs, Florida, and is rated 10 out of 10 by the legal website AVVO. For more information, call 954-979-6566 or email us for a free consultation.
Law Office of Gary M. Landau P.A.
7401 Wiles Road, Suite 204
Coral Springs, FL 33067
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