If you have gone through all the steps of inspection and repairs and financing has been verified you are likely looking forward to closing on your real estate transaction. At this point some people heave a sigh of relief and put their concerns aside. Not so fast.
Prior to closing there are still a number of details that need your attention. Even signing the final documents with the Escrow Officer do not finalize the transaction. It is only after sufficient funds have arrived and the deed transfer is completed by recording it at the County that the transaction is closed. That means the monies have been disbursed to the entitled parties with the remainder going to the seller who releases the deed.
Often folks think that sitting at the escrow desk and signing papers is the final step. Likely that is because the agent has alluded to this meeting as “closing” when in fact, it is merely “signing”. Many seasoned agents will tell you of at least one time where everyone completed the signing – both buyers and sellers – only to have a lender withdraw their commitment to fund due to unforeseen changes in circumstances. In those instances “closing” does not occur that day, or perhaps ever with that particular buyer.
When a buyer and seller agree to a transfer of real estate at a certain price that begins the process. Buyer and seller may negotiate further due to needed repairs discovered by inspection or defects in title disclosed in the initial; Preliminary Title Commitment. We are informed by several title company folks that many agents do not read these documents and in fact some do not forward them to their clients. As a buyer or seller you will want to see this document since it will inform you not only of financial obligations against the real estate, but of all other parties with claim to the property. If you are at this stage in the process you will want to insist on seeing this important document.
Usually those with claim to the property do not have ownership but rather rights to trespass known as easements. Common easements disclosed are for utilities such as power and water, streets or roadways, communications like cable and telephone or other access incidental to maintaining functioning amenities that compliment the property. Sometimes though, those easements can be perceived by a buyer as egregious, especially when they allow unfettered access by a neighbor to cross the property as a walkway or in anticipation of a future subdivision that will place a road across that property. Others will object to obtrusive Conditions Covenants and Restrictions (CCRs) that govern the property and are referenced in this preliminary title commitment.
By the same token a buyer will be well served to read this “prelim” carefully to ensure that they will have unfettered access to the property they are buying especially if access is across another property or via private road. This document will also inform the affected parties of any lawsuits that may have been filed against the property. These “lis pendens” can take several months, even years to work themselves out in Court, often at significant expense to those parties involved. Conflicts that may affect title will usually be noted as exceptions in the preliminary report which means that the title company “closing” the transaction will not insure against those defects.
This document as well as the settlement statement you will sign at escrow should be reviewed carefully by all parties including the agent that represents you. Assuming everything will be fine is okay as long as it is verified in writing.