10 Common Real Estate Closing Questions Answered By The Experts

meet-the-expertsASK THE EXPERTS will be an occasional feature where I interview industry professionals and get their insight to the most commonly asked questions in their field.

This post features Scott Mills, Esq., Attorney-at-Law with Wilson and Mills, LLC, a real estate law firm .  I asked him to provide answers to these questions.  Click on read the rest of the story for the full interview.

1) Who does the attorney represent?

Generally speaking, closing attorneys represent the lending institutions to make certain that the lenders documents are correctly executed and are effective at placing an enforceable lien against the subject parcel.

2) Who gets to choose the attorney?

Many people will say that it is the buyer’s right to choose since they are paying the fees, but my experience has been that it generally is something that is up for negotiation between the parties (often if the seller is paying closing costs, they will make the argument that they should have the right to choose where they close).  Technically, the bank should be the one to choose since we are working to perfect their lien on the subject parcel, but since the banks pass the cost of the attorney off to the borrower it has become common industry practice that the buyer chooses.

3) What if I pay cash for the house?

If a buyer pays cash for the property I would argue that they are hiring the attorney to work on their behalf and correctly transfer the title of the property from the seller, but it often is unclear who the closing attorney is technically working for.  With our cash transactions, unless it is notated in the contract that I represent one party, I generally do not attempt to represent either party and remain neutral.

4) Do I HAVE TO close using an attorney?

Yes, in the state of Georgia, it is considered practicing law to handle the transfer of title on a property and doing so without an attorney constitutes an illegal activity (practicing law without a license).

5) What is title insurance and why should I get it?

Why you as a property owner should have title insurance is confusing to most people. Simply put, title insurance will help resolve “clouds” on the title of a property that you own. To transfer property, you must provide clear title; if there are unresolved issues (clouds) you are responsible for rectifying the situation, even if you had nothing to do with it.  (See attached document for more details Barry)

6)   How much does title insurance cost?

The title insurance industry is in the process of increasing their rates.  My firm writes our policies through Fidelity Nation Title.  Effective March 1, 2009, they officially raised their rates for the first time in over 9 years.  The new rates are as follows:  For Loan Polices ranging from $0 to $100,000, it is $3.00 per thousand borrowed; for Loan Policies ranging from $100,001 to $500,000, it is $2.40 per thousand borrowed; and for Loan Policies above $500,001, it is $2.10 per thousand borrowed.  Owner’s Title Insurance is also on a sliding scale, but is more expensive.  For Owner’s Policies ranging from $0 to $100,000, it is $4.20 per thousand of the purchase price; for Owner’s Policies ranging from $100,001 to $500,000, it is $3.60 per thousand of the purchase price; and for Owner’s Policies of $500,001 and above, it is $3.00 per thousand of the purchase price.

7) How long does it take to close on a house?

Generally, title work can be obtained in 48 hours or less.  Provided there are no issues with the title work (open liens etc.) we can be ready to close within a week.  The actual closing itself should not take more than an hour at the most.  If the law firm (and lender) have done their work correctly, the closing statement should have already been received and reviewed by all of the parties prior to the closing which often ensures a very smooth closing.

8) What if I want to read all the closing documents before signing them?

The ability to read the documents prior to closing is actually more of a lender issue than it is a closing attorney issue.  If the borrower requests (sometimes repeatedly) that their lender provide them with the closing documents, the lenders are pretty good at getting the closing package to us earlier than they normally do.  Once we have the documents, we can provide the documents to the buyer or seller (and I will let them sit in my conference room to read them if they wish).

9) Can the attorney sign for me if I can’t be at the closing?

I would submit that it is an improper practice for a closing attorney to sign on behalf of anyone in the transaction and I certainly would never do it.  When at all possible, a party that cannot make it to the closing should try to get a friend or family member to handle signing on their behalf.  Often a realtor will obtain the authority to sign as the Power of Attorney on a party’s behalf, but I believe the better practice would be to get a third party to sign rather than the realtor (or loan officer) to avoid any appearance of impropriety.

10) What if I bring too much or too little money to the closing?

If you bring too much money to a closing, the closing attorney will simply cut you a check for the overage at the closing.  Bringing too little money is a little more difficult to answer; most closing attorneys will take personal checks for the difference with varying limits (depending on their risk tolerance).  I generally will take a check up to $1,000.00 in those instances.

Here are some more Ask the Experts posts:

10 Common Mortgage and Financing Related Questions Answered By The Experts

10 Common Appraisal Questions Answered By The Experts

10 Common Home Inspection Related Questions Answered By The Experts