The closing process is the last phase of any real estate transaction. These steps can make closing on a real estate transaction a little easier.
- Closing a real estate transaction is the last phase of the property ownership process
- In Florida, the closing process involves several steps, including opening an escrow account, ordering a title search, and scheduling a closing date
- Closing happens 30–45 days after the sales contract is signed but can vary depending on the complexity of the transaction
- Closing usually takes place at the offices of the title company or attorney but can also be done in the presence of a notary at a location of your choosing
- Partnering with a professional real estate attorney can help streamline the process and make the transaction less intimidating
Closing a Florida real estate transaction can be a complicated process that even the most experienced buyers and sellers may find daunting. The closing process involves numerous steps and documents and can often be the most stressful part of the transaction.
However, while the process may be time-consuming and very detailed, understanding the basics of what's involved can help make closing a Florida residential real estate transaction a less daunting task.
Any missed steps along the way could result in costly delays, disputes, or even the cancellation of your transaction. To help make the process less intimidating, your REALTOR and the title company/attorney will walk you through the process to help make it less intimidating. Here are some of the critical steps you'll see along the way.
1. Fully executed contract with an effective date.
The first step in any successful real estate transaction is to have a fully executed contract with an effective date. This is one of the most critical dates in a real estate contract.
The effective date is when the last to sign the contract, either buyer or seller (but usually the seller), signs, and the agent delivers the fully signed agreement to all parties involved in the transaction. This date starts the performance period for both the buyer and the seller and establishes deadlines for critical tasks to be completed.
Since the effective date cannot precede the execution date, the contract must be signed and dated by all parties to be effective. If any of the buyers or sellers involved in the transaction refuse to sign the contract, the deal is void, and the property will not change hands.
Most deadlines in a Florida real estate contract are determined based on the effective date. For example, the date by which the buyer must secure financing and the date by which the seller must provide a clear title are both typically set based on the effective date.
2. Escrow deposit is due
Once the contract is fully executed, the buyer will deposit their earnest money deposit into an escrow account held by a third party designated in the purchase agreement. The earnest money deposit is considered good faith that you're serious about buying the property.
In most Florida real estate transactions, the seller designates a closing attorney or title company who acts as a third party to oversee the transaction. The third party will hold onto the earnest money deposit and other essential closing documents related to the transaction, such as loan documents, the sales contract, and the like until the finalization of the sale.
You can make the escrow deposit through a personal check, money order, or online. Alternatively, you can wire the funds to the account. However, with increased online wire transfer fraud, it's essential to be careful when sending money. Criminals can easily spoof email addresses and create realistic-looking websites that can trick you into sending money to the wrong account. When wiring money:
- Confirm the account details with the third party directly over the phone or email before sending any money
- Avoid sending money to duplicate accounts
- Request a receipt or confirmation email after sending the wire transfer
- Keep records of all communication related to the transaction
- If something looks suspicious, trust your gut and contact the third party or your bank for clarification before sending any money
3. Complete title and municipal lien searches
A title search is a critical step in the home-buying process as it allows you to confirm that the seller is the rightful owner and that there are no other claims, mortgages, unpaid property taxes, or liens against the property.
Your closing attorney may also order a boundary survey that will show any easements, encroachment, and the location of any permanent structures on the property. Surveys are, at times, at the discretion of the buyer. However, there are many times when the survey is required by either the title insurance underwriter or lender. If there are any outstanding issues, they must be resolved before moving forward with the purchase.
In Florida, the title company or closing attorney will typically handle the title search on behalf of the buyer. The title company will order a search of the public records to check for any outstanding claims or liens against the property. They will also search the property's title history to ensure there are no hidden claims or easements.
Once the title search is complete, the title company will provide you with a report outlining any issues uncovered during the search. If the title is clean and without any defects, the real estate attorney or title company will order the issuance of a title insurance policy, which will protect you from any claims or liens that may arise in the future.
4. Schedule a closing date
With a fully executed contract, escrow account funded, and title and municipal lien searches complete, the final step is to schedule a closing date. The property officially changes hands from the seller to the buyer, and all closing documents are signed. It typically takes place 30 to 45 days after the sales contract is signed but can vary depending on the complexity of the transaction and the availability of the parties involved.
Coordinating the closing date involves the seller, buyer, mortgage lender, and real estate agents. The escrow company will send the closing documents to all parties involved in the transaction a few days before closing.
Once a date is set, all parties must be available to sign the necessary documents and transfer funds. Lenders will re-run credit reports and verify employment and income leading up to closing to ensure there have been no changes that could affect the buyer's ability to repay the loan.
Closing usually takes place at the offices of the title company or attorney, but in some cases can also be done in the presence of a notary. The signed closing documents are then returned to the closing agent, and the buyer makes all final payments to the seller. The deed is then recorded with the county, and the buyer takes ownership of the property.
Streamline your Florida residential real estate closing with PeytonBolin
With the complexity and numerous steps involved in a Florida residential real estate closing, it's crucial to have an experienced and knowledgeable team by your side. At PeytonBolin, we are a professional real estate law firm that has closed numerous residential real estate transactions in Florida.
We understand the ins and outs of the closing process and can help streamline it to make it as smooth and stress-free as possible for our clients. Contact us today to discuss your Florida residential real estate closing.