Today, I want to provide some information about Real Estate closings in NC. My primary focus is going to be on residential properties, but some of the information may be applicable to commercial and other types of transactions, but my primary purpose is to discuss residential Real Estate closings.
The way that I think with will be most easily accomplished is in a Question & Answer format. If you have a question that I don’t answer, please leave me a comment, and I will try to answer it. I will provide brief answers to the following questions:
1) Who sets the closings date?
2) Who pays the closing costs?
3) How much should I expect to pay in closings costs?
4) What inspections do I need before closing?
5) What happens if we don’t close on the agreed upon closing date?
6) What is title insurance?
Q: Who sets the closings date?
As part of negotiating the sale of the property, the buyer and the seller agree on a closing date. Typically, the buyer is the first one to mention a closing date because they are the ones initiating the offer, but when the seller counters the offer he or she may amend the closing date according to their schedule, but in the end the buyer and the seller must agree on a closing date that will work for both parties.
Q: Who pays the closing costs?
In North Carolina, the typical practice is for the buyer to pay those closing costs associated with receiving a loan and inspecting the property. The seller does not set, nor does the seller typically have any control whatsoever over the closings costs. The seller typically pays for a deed to be prepared, a portion of the attorney fees, and revenue stamp fees, which are a tax to the seller.
However, the buyer, as part of the offer, can negotiate that the seller pays for all or a portion of the buyer’s closings costs. This is not always allowed, as some loans have a limit on how much of the buyer’s closing costs the seller may pay.
Q: How much should I expect to pay in closings costs?
This question has no real definitive answer, until I know a number of specifics regarding the transaction. This is determined by a number of factors including: the cost of the home, the type of loan, regional fees for services associated with closing (survey, appraisal, attorney, etc.). It is not uncommon to see closing costs from $2,000 to $5,000 on a home priced around $125,000 to $150,000.
Q: What inspections do I need before closing?
Before you get to the closing table you better have all the inspection completed to your satisfaction, because it may be too late when you get to closing. There are a number of different type of inspections available to you as a buyer, which include: a survey, a home inspection, a radon inspection, a termite / pest inspection, an appraisal, a well / sewer system inspection. They type of inspections that are appropriate for your situation will vary depending on the property that you are purchasing. The best thing to do is to consult a Real Estate agent about what inspection may be appropriate for your situation. Make sure you give yourself time to have these completed, as well as detail guidelines about what is to happen if an inspection returns bad news about the property. Since the buyer is choosing to have these inspections, the buyer is responsible to pay for these inspections.
Q: What happens if we don’t close on the agreed upon closing date?
It depends on why closing is delayed and what the buyer and the seller have agreed to. Let’s say that you are buying a home that is set to close on October 1, 2008. The way that the standard contract is written, if the closing did not occur on October 1, then there would be a ten day grace period. If the home had not closed by October 10th, then the party who was the cause of the closing delay would begin being charged 8 percent interest per annum from the end of the ten day period until the closing occurred on the contract was terminated.
This means that if you were buying a $200,000 home, and you were the offending party for five days beyond the ten-day grace period, then you would owe the other party approximately $220 in penalties for delaying the closing. If the property has not closed within 30 days of the original target date of October 1, then the non-offending party has the unilateral right to terminate the contract and receive the earnest money and the penalty, but the offending party cannot terminate the contract only accept the decision of the non-offending party.
However, if you know there is going to be a delay, you will probably want to work out some type of an agreement with the other party as soon as possible. The buyer and seller can always agree to alter the terms of their agreement.
Q: What is title insurance?
Title insurance is an insurance policy which protects the buyer from people makes claims about their right to ownership. Most lenders require that the home owner purchase title insurance. If someone comes and claims that you do not actually own the property, then your title insurance company will provide you with legal counsel and assistance to settle the dispute. You need to carefully read your title insurance policy to make certain that you understand what exactly it covers and how you be helped it is proven that you did not legally receive title to the property.
If you have other questions regarding real estate closings, please e-mail me or leave a comment.
Joseph Griffin
