Anatomy of A Florida Real Estate Closing
Last Update: 10/30/17
Florida Real Estate Lawyer
The traditional definition of a real estate "closing" is when and where the keys and money are exchanged and the transaction is completed. Based on my years of experience, that is only when the closing begins.
Prior to the closing date, the mortgage lender sends their loan documents to the closing agent along with their closing instructions, which set forth the conditions to close the loan, and the mortgage is signed by the homeowner.
The closing agent (after verifying the Closing Disclosure has been provided to the borrower 3 days before the closing - see below) gathers all of the necessary documentation from both the buyer and the seller, including the Deed, Affidavits and a Bill of Sale. The closing agent ensures that all necessary papers are signed, witnessed, notarized and recorded and that the funds are disbursed to the seller, real estate agents, insurance companies, inspection company, surveyor, and, in some instances, the lender.
In general, the buyer is required to bring to the closing a certified bank check or by wire transfer. The exact dollar amount necessary to close the transaction will be provided to the buyer 3 days before the closing (See the Closing Disclosure).
At the closing table, the closing agent will explain the documents being signed and each and every charge on the disclosure form before any money is transferred and the transaction closes. Once the transaction closes, the closing agent will then send the Deed and Mortgage to recording in the Public records for the county in which the property is located. At closing, the parties sometimes execute a tax reproration agreement to cover the contingency that the actual real estate taxes are greater or less than the amount collected at the closing.
Who Pays The Closing Costs?
The answer is that it depends. It depends on what the parties negotiate, which part of the state the property is located in, and which "standard" contract is being used, among other factors. For example, customary closing costs for buyers and sellers in Broward and Miami-Dade Counties are different than they are in Palm Beach County and all other counties in Florida.
See (From Our Real Estate Blog): Florida Residential Closing Costs
What Happened To The HUD Or Closing Statement?
The Settlement Statement (Commonly Known As A "Closing Statement" or "HUD-1") Is No Longer Being Used For Residential Purchase Transactions Involving A Federally Insured Mortgage
The HUD and two other forms (the Truth in Lending Disclosure Statement (TIL) and the Good Faith Estimate (GFE)) have been replaced with 2 new forms. This change was mandated by the Consumer Financial Protection Bureau as part of the Dodd-Frank Act. According to the "Guide to the Loan Estimate and Closing Disclosure Forms" the new forms are known as:
1.The Loan Estimate - The Loan Estimate is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying. The Loan Estimate must be provided to consumers no later than three business days after they submit a loan application.
2. The Closing Disclosure - This form is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. The Closing Disclosure must be provided to consumers three business days before they close on the loan.The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan.
More From The Guide:
The forms also provide more information to help consumers decide whether they can afford the loan and to compare the cost of different loan offers, including the cost of the loans over time.
The Loan Estimate and Closing Disclosure must be used for most closed-end consumer mortgages. Home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land) must continue to use current disclosure forms required by TILA and RESPA separately. The TILA-RESPA rule does not apply to loans made by persons who are not considered “creditors” because they make five or fewer mortgages as year.
Generally, the Loan Estimate and Closing Disclosure require the disclosure of categories of information that will vary due to the type of loan, the payment schedule of the loan, the fees charged, the terms of the transaction, and State law provisions. The extent of these variations cannot be shown on a single, static example. The Guide includes most of the requirements concerning completing the Loan Estimate and Closing Disclosure. However, the Guide does not illustrate all of the permutations of the information required or omitted from the Loan Estimate or Closing Disclosure for any particular transaction. Only the TILA-RESPA rule and its official interpretations can provide complete and definitive information regarding its requirements.
What Happens After The Buyer Leaves The Real Estate Closing Table?
Once the transaction closes and the funds are disbursed, then the closing agent will send the Deed and Mortgage to the county recording office for the documents to be recorded in the official records of the county where the property is located.
When the closing agent receives the recording information for the Deed and Mortgage, which includes the official record book number and page where these documents are recorded, then the closing agent will issue the title insurance policies.
The title insurance policies are issued to the homeowner (which is call an Owner's Title Insurance Policy) and to their mortgage lender (which is called the Mortgagee's Title Insurance Policy). Once the homeowner receives their recorded Deed and Title Insurance Policy, the homeowner should make sure no additional items are added to their title insurance policy. Meaning, they should review their title insurance commitment (which they should receive at closing) and compare the two documents. There should not be any exceptions on the title insurance policy that were not included on the title insurance commitment.
Once all of these steps are completed, is when the closing ends.
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