A real estate closing is usually a literal meeting when ownership of buildings, land and some businesses is changed from the seller to the buyer. Otherwise stated, a closing is where a seller literally moves ownership of assets to the buyer in exchange for money.
A closing typically happens several weeks after a buyer and a seller have agreed (by handshake or by a purchase agreement) to make the sale/purchase. After the buyer and seller agreed, the buyer or buyer’s bank secures appraisals, formulizes the loan details and has the property’s government records searched to confirm that there are no liens against the property.
After this preliminary work has been completed, usually the buyer’s attorney or title agent will schedule the closing. Almost all the documents that will be signed or finalized at the closing are delivered to the buyer and seller for prior review. The closing is facilitated by a closing agent, who is usually the buyer’s attorney or title agent.
At the physical meeting that comprises the closing, the buyer provides money to the seller. Because there are various fees and taxes associated with the closing and there are often also calculations on tax proration credits as a part of the closing, the money is actually paid by the buyer into the closing agent’s escrow (trust) account. Likewise, the deed and other documents are delivered to the closing agent in escrow/trust to give to the buyer once the closing agent confirms that the money is received and “good funds.”
This process of using a closing agent to serve as a “holder of money and documents from buyers and sellers until all requirements are satisfied” avoids the concern that some buyers have of paying money for property before they receive the deed. Conversely, it also frees sellers from the concern that they may sign and give up the deed before they have the money.
Closings are important but common, and some of us who are attorneys and title agents will conduct several closings in any given week. Sometimes, some documents can be signed by some of the necessary closing participants before the closing. For instance, if there is an LLC involved as a seller or buyer, some members of the LLC may be able to sign their documents before the closing meeting.
Notably, as most of us know, in Ohio, spouses have legal rights in the property of their married partners, even if the spouses’ names are not “on the deed.” Therefore, spouses are usually required to participate in any closing where the other spouse is a part of the closing.
Everyone should bring picture IDs to closings, even if the closing agents know the people personally. This allows the closing agent to keep photographs of the ID to create a complete file for future reference.
Immediately following the closing, the closing agent will record the property deed (and mortgage, if appropriate) and disburse the net proceeds (after the fees, taxes and expenses are paid) to the seller.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.