Written by Fred Anderson
A buyer of real estate is usually entering into one of the largest financial transactions of their lifetimes and one with a mountain of paperwork. Yet, it’s not unusual for a buyer to show up at the closing and sign documents they have not reviewed, not ask any questions that they may have, and not consult an attorney. Although, financial lenders have many similar goals to the buyer, financial lenders are not representing the buyer on legal issues concerning the purchase issues and are actually in a conflict of interest concerning the lending issues. Although, real estate brokers have the same goal as the buyer of closing the transaction, real estate brokers are definitely not representing the buyer concerning legal issues.
Normally there are two closings for the buyer (i) funding for the transaction (with financial lender) and (ii) purchase transaction (with seller). In both transactions, I suggest to try to get all the documents before closing so that a buyer review can be done before hand and does not occur while everyone is sitting and watching. The lender is not infallible and can make mistakes. The lender has its “forms” and it takes a tremendous effort to have them change language unless it is really wrong. However, some of the form language may be wrong for the transaction. A buyer should make sure the documents reflect what the buyer believes the transaction is.
The settlement statements are the keys to the financial side of the funding transaction and the purchase transaction so the figures should be reviewed for accuracy and questioned as to how calculated. On the financing side, the next key documents should be the promissory note and mortgage. The terms of the deal should be correct. On the purchase side, a key document is a title opinion which is needed to find out who owns the real estate in order to accurately transfer it and whether there are any liens or objections that need to be taken care of before the transfer. The warranty deed needs to accurately reflect the name of the seller who owns and is transferring the real estate, the correct legal description of the real estate, and how the buyer wants to take title.
There are several other documents that may be necessary depending on the closing and issues involved. I encourage my clients to review all the documents in order to understand them as much as they can and ask questions of anything they do not understand. They should use counsel if necessary or if they have questions. They should feel comfortable with the process and the documents before they sign. Be ready to successfully scale the mountain of paperwork.
Happy Closings.
