Counsel from the Closer: Communicate to Avoid Surprises at The Table
by Angela Pascoe, Cook & James Managing Paralegal
How often have you made it to the real estate closing table and been delayed? An unexpected amount pops up or fees don’t match? Repairs didn’t get completed or weren’t paid for – or weren’t reported as paid for. And what about an HOA? Oops, forgot to mention we need to order an HOA.
Any and all these situations are, unfortunately, common and will delay the closing. That’s never pleasant for anyone.
I can tell you from working with hundreds of agents and lenders during my 20 plus years that surprises at closings happen. But these surprises can be avoided when there’s meticulous communication between agents, lenders, buyers and sellers throughout the transaction with the pre-closer, closer and post-closer.
Here at Cook & James, as closing attorneys, when we ask for information, it’s for an important reason, even though it may seem like a trivial detail to you. Without key details being accurate, the smoothness of your closing is jeopardized. Conversely, with good communication, we are all riding in the same car, listening to the same tunes, arriving together, on time at our common destination – a successful and stress-free closing.
Here are a few commonly overlooked – or viewed as under-important – items that can make or break an easy experience at the closing table.
Vesting. How will your buyer be taking title, meaning exactly how are they represented? Middle initials, full middle names, hyphenated last names? As the closing attorney firm, we must make sure this matches exactly with the lender’s paper work, or closing will be delayed. A few other tips on vesting: a person must be 18 years or older, legal names must be used and the type of ownership must be defined (“joint tenant with rights of survivorship,” if you’re owning with someone else; or “tenants in common,” in which each party owns half and if one passes that 50 percent goes to their to survivors.)
Address. This seems obvious, but it’s unbelievably common that forwarding addresses for buyers and sellers are either absent or incorrect in the system. Without an accurate forwarding address, the closing attorney’s office is hamstrung for post-closing communication and any refunds, additional signatures, etc. can be at risk.
One note on addresses with regard to email. In this day and age, email addresses are a given and established at the very beginning of the closing discussions. We love the ease of communicating digitally but stress it is not the primary method. Secure portals are mandatory. As buyers, sellers and agents, it’s paramount to set up log ins and USE THEM to communicate securely. Again, it’s unbelievable how many times we get private information emailed to us like social security numbers, loan numbers or wiring instructions with account numbers. This is incredibly dangerous and puts you at risk! To keep all parties safe from fraud and hacking, our secure portal is our top method of communicating anything that is not public knowledge. The software vendor we use for settlement process is Qualia.
Homeowners Insurance. Anytime there is a loan involved (the majority of the time), it’s very important to obtain a homeowners insurance declaration page. Most of the time this will be paid at closing but, on occasion, some buyers pay for it ahead of time. This is important to know because you don’t want to get to closing and realize no one paid the insurance policy…or paid twice for it!
Home Owners Association. Confirm whether or not the property has an HOA. Most often, having HOA information immediately triggers all closing letters being ordered in time for closing and the fees are generated necessary for lenders to properly prepare closing fees. A good rule of thumb with HOAs is that a management company needs at least five business days prior to closing to create a closing letter, otherwise the parties may incur as much as $150 in rush fees. Again, not a good surprise at the closing table.
Unexpected repairs. During the contract to close process, items often arise that the buyer wants the seller to repair before closing. It’s imperative the closing attorney knows immediately so that they collect any monies due at closing. Many times, agents get really busy protecting their clients with amendments and negotiating terms that they forget to inform the closing attorney. For example, a buyer wants a leaky spot in the roof repaired before closing but at the walk through the job wasn’t done to their satisfaction. At this point, the repair costs must be collected at closing but can’t be factored in unless the closer is aware. Any items like this impact the loan and are one of the many surprises that can cause a delay at closing.
Payoffs. The seller must confirm what payoffs they have. By communicating this information in the beginning, the attorney’s office is able to properly compare all information with the title received and reconcile appropriately. For example, a property closes on the 10th of the month so the payoff is on the 9th. But we learned taxes were paid out of escrow and now the escrow is short, cascading down and creating a payoff that is also short. By communicating everything the closer requests when the closer requests it, everyone can be on the same page and avoid surprises at the closing table.
Commission Agreements. Believe it or not, many agents get so caught up in protecting their buyer and seller interests that they neglect to confirm the amount of their commission with the closing attorney’s office. We want to make sure everyone gets paid for their hard work with the exact amount they are due. I think most agents focus on servicing their clients, sometimes at the expense of themselves.
So, you can see how even the “smallest” amendment, change, detail or piece of information requested can impact how smoothly a closing goes. And just as important as it is for agents, buyers and sellers to communicate with the closing attorney, it’s equally paramount that we speak, correspond and connect with them. It’s all in an effort to make the transaction goes smoothly and there are no surprises at the closing table.
Angela Pascoe, managing paralegal at Cook & James, works closely with the attorneys and is responsible for managing all real estate matters at Cook & James. Not only does she bring more than 20 years’ experience in the field of real estate law, she works as a team player across all departments reinforcing the Cook & James mission and commitment to providing the best service.