Who Controls The Closing Date For Escrow - The Buyer Or The Seller
by Sandy Gadow
When you make an offer to purchase a property, you will sign a Purchase or
Purchase and Sales Agreement with the Seller. This document will be the binding
contract and agreement between you and the Seller and the provisions in that
document will spell out certain events which must take place before your escrow
can close. Within the Purchase Agreement will be a provision for the scheduled
"Date of Closing." A date is normally filled in when the offer to purchase is
made by the buyer. Once your offer is presented to the seller, the seller may
choose to change this date before accepting your offer.
Both you and the Seller will come up with a closing date which seems reasonable.
The closing date should allow you enough time to apply for and obtain a
mortgage, if you will be getting a loan to help finance your purchase, and the
seller will choose a closing date which allows ample time to move out and find a
new home or property. The closing date which is agreed upon should also take
into consideration such contingencies as property inspections, the title report
review, and any special circumstances, such as one or more parties being out of
town or out of the country, an estate or probate situation, or other
complications which may involve legal assistance.
To set a reasonable closing date, both parties need to understand what their
individual responsibilities are before closing can occur. You and the Seller
should list the tasks you each must perform and then try to calculate a time
limit for each of these tasks. The Seller, for example, may find that there are
liens or other encumbrances on the title of which he was not aware, and these
"clouds" on the title will need to be cleared up before the title can be
transferred. The property inspection might show up minor defects which the
Seller may be required to repair, or major defects might become evident, in
which case you and the Seller may need to come to an agreement as to who will
pay for these repairs. These types of events are not unexpected in a property
purchase and should cause no delay in the closing, as long as they have been
provided for ahead of time. Before setting the closing date, try to think of any
situations which must take place before you go to closing.
The Seller may request that the closing date be contingent upon the sale of his
present home. This date may be rather arbitrary, but a tentative 30, 60 or 90
day closing date could be set and when the actual closing date can be set, then
an addendum to your purchase contract can be drawn and signed by both you and
the seller. In this case, you would want to be sure to notify your escrow or
closing officer of any changes in the date for closing.
Keeping the escrow officer informed of exact dates is very important, as she
will be prorating and calculating certain expenses and credits, such as
interest, taxes, and insurance and these will be calculated right up until the
day of closing.
The lender may have an important role in setting the closing date. Your loan may
take longer than traditionally expected, perhaps you have additional items the
lender needs to verify, or perhaps you are self-employed and the lender will
require Profit and Loss Statements and other documentation to document your
financial profile. Perhaps the lender will require that certain repairs on the
property take place before they will agree to fund the loan. To avoid any
unnecessary delay in closing by a lender, you might want to consider getting
"pre-qualified" by a lender and asking them if they see anything unusual in your
credit which could hold up your loan. If property repairs are required, you
could ask that money be held in escrow for these repairs, rather than hold up
the agreed upon closing date.
The closing agent may have a role in controlling the closing day. Check with the
escrow officer to get an idea of how long it will take to issue the title
reports and how long it will take to prepare the closing documents.
Schedule your closing as soon as possible in the transaction, as escrow officers
often are busier on some days than others and you would want to be sure to
reserve your time and day. When scheduling your closing with the title or escrow
company, let them know that you want ample time to go over and review all the
paperwork. Oftentimes, Buyers and Sellers are rushed through this critical
process, as the closing agent may have a busy schedule that day and these
documents are all standard and commonplace to her. Closing agents may forget
that each provision and each commitment listed in a document may be new to the
party and will need to be explained carefully.
When an attorney is involved in the transaction, whether representing the Buyer
or the Seller, normally the attorney will explain each provision in detail. Keep
in mind that the escrow officer or closing agent is a neutral third party only.
The title company cannot give legal advice or interpret documents for you. The
closing officer can explain each item and review how the numbers were
calculated, but for any legal opinions, you will want to consult with your
attorney.
Bio:
Sandra Gadow is a title officer with more than 25 years experience in escrow,
title, and real estate. She has helped thousands of people buy their homes.
She is a mortgage broker, and a member of the American Land Title Association,
the California Escrow Association, the National Association of Real Estate
Editors, and the California Association of Realtors.