Closing is essentially the day when your Home Purchase becomes Your New Home! How exciting!
On Closing, Buyers meet with their Lawyer who essentially organizes the money, mortgage details and adjustments necessary to transfer the Seller’s Home to the new Buyer. The Lawyer takes in money from the Buyer’s Deposit Money that was held in the Brokerage’s Trust Account, connects with the Mortgage Broker (if any) to handle the Mortgage amount, makes any Adjustments necessary and ultimately pays out money to the Seller’s Lawyer. The Buyer’s Lawyer also makes sure that the Buyer’s Title is properly recorded in local records along with any mortgages.
All papers are prepared by closing parties such as, Title companies, Lenders and Lawyers. This paperwork reflects the Purchase and Sale Agreement that both Buyer and Seller agreed to and signed, and allows all parties to the transaction to verify their interests. For instance, Buyers get the Title to the property, Lenders have their Mortgage Loans recorded in the Public Records and Governments collect their Land Transfer Taxes.
The Lawyer reviews the Purchase and Sale Agreement to determine what payments and credits the Seller should receive and what amounts are due from the Buyer. The Lawyer also assures that certain transaction costs are paid such as Taxes and Title Searches.
As mentioned earlier, Adjustments are made on Closing. For instance, if the Seller pre-paid taxes four months in advance, the Lawyer will compensate the Seller for the prepayment at Closing through the Buyer’s Statement of Adjustments.
Closing is also a time where keys are released to the Buyer who typically can move into their new home on or before 6:00pm Date of Competition and the Seller must give vacant possession at that time and date.