First Time Buyers; What to Expect at an Illinois Real Estate Closing

Law news | April 2, 2020

What to Expect at an Illinois Real Estate Closing:
Attending your first real estate closing can be both an uneasy and exciting event. This article attempts to alleviate some of the uncertainty many first-time buyers may have about the process by summarizing what takes place at a closing. What many buyers do not realize is that, if you are taking a loan out to purchase the property, you are really closing two transactions on the day you purchase your home: One closing with your lender and another closing with the seller. However, in a typical residential transaction, both closings will occur simultaneously at the same location.

Where Will the Closing Take Place?
In Lake County, and Northern Illinois in general, it is customary for the seller’s attorney to order and prepare title insurance for both the buyer and seller involved in the transaction as the title company will ultimately be responsible for insuring clear title is being conveyed from the seller to the buyer. Depending on which title company the seller’s attorney is affiliated with, the closing will usually take place at a title company location near where the property being purchased is situated.

Who Will Be at the Closing?
The seller’s attorney will be there along with the buyer and buyer’s attorney. The seller may be there but it is not necessary that they be in attendance as they can pre-sign any documentation that requires their signature (i.e. the deed, bill of sale, affidavit of title, transfer tax documents etc.). Unless my seller clients are adamant about attending the closing, I always try and have them sign their documents in advance as it tends to make the actual closing move along a bit faster. Also typically in attendance are the buyer’s and seller’s real estate agents, if any. The agents are there to assist with any last minute walk through issues and deliver the keys. A mortgage broker or a representative for your lender may also make an appearance but it is usually not essential they be there.

The most important person at the closing is the title company representative or “closer” who helps facilitate the transaction. The closer is the person who, among other things, handles all the loan documentation sent by the buyer’s lender, makes certain that all required lender documents are signed and that the many other lender requirements are fulfilled, ensures real estate taxes and applicable transfer taxes are paid, prepares the final settlement statement which outlines the closing cost charges to both the buyer and seller, assists the seller’s attorney in ensuring clean title is being conveyed to the buyer, ensures all the proper parties to the transaction are paid, and records the deed and mortgage with the applicable county recorder’s office. Given the amount of documentation to be handled at a typical closing, an experienced and organized closer can help make the transaction go smoothly, saving both parties time and money.

What Documents Will I Need to Sign?
The first set of documents you will need to sign is the loan documentation. Your lender will send a loan package to the title company closer in advance of the closing and will outline for the closer which documents need to be signed. Your attorney should explain to you the important aspects of each document. The most important loan documents you sign however will be: (a) the note, which is the document that sets forth the terms of your loan, and is simply the document that acts as your written promise to repay the loan amount; and (b) the mortgage, which is the document that helps secure your promise to repay the amount evidenced by the note. Through the mortgage, you are pledging your new home as collateral to the bank until the loan is paid off. The mortgage is recorded against the property and acts as a lien on the property until the loan is paid off. If you default on your mortgage payments or breach other covenants contained in the mortgage, the lender can seek to take possession of the home through a foreclosure process. There will be other ancillary loan documents which will require signatures by the buyer but the note and mortgage are by far the most important.

Once all the loan documents are signed, the seller’s attorney will have a smaller stack of documents to sign such as disclosures as to title insurance charges, certifications that you, the buyer have not done anything to cloud title to the property, and transfer tax declarations. Again, your attorney will review this documentation with you and should ensure everything is in order. Your attorney will also review other very important documentation for you that does not require your signature. Such documentation includes the deed, bill of sale, affidavit of title and the title insurance policy which will act as evidence that you are the new owner of the property, and that the property is being conveyed to you free of any liens or encumbrances that may have been created by any prior owners. If you have any questions about any of the documents you are signing or feel something may be in error, do not hesitate to speak up and ask your attorney for clarification. That is why you have an attorney with you at the closing.

How Long Will the Closing Take?
The time it takes to complete the closing depends on a host of factors ranging from whether the closing documents were ready for signature at the start of the closing to whether or not there were final walk-through issues that arose that must be resolved between the buyer and seller. The most important factor however is whether the lender’s wire was sent and received by the title company in a timely fashion. A lender will wire the buyer’s loan amount to the closing in lieu of sending a certified check with the loan documents. Valuable time can be lost sitting around the closing table waiting for the wire to hit the title company’s account after all the closing documents have been signed. Without the wire, the seller cannot be paid the purchase price amount and the closing cannot be completed. Assuming there is a lender involved and the parties are not waiting on the lender’s wire, a typical residential real estate closing should take between 1 ½ and 2 hours.

Once the closing is complete, the closer will still have some work to complete behind the scenes such as recording the deed, sending payments to the seller’s lender to pay off the seller’s outstanding loan balance, if any, and sending the applicable transfer tax forms and payments to the proper governmental entities. However, once the seller has been paid and the keys have been delivered to you, the home is now yours. Hopefully this article helps ease any concerns you may be having about the closing process, however, if you have any further questions about the process, feel free to contact my office and we will be happy to answer them for you.

Law news
on April 2, 2020

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