Real Estate Closings in NC: A Step-by-Step Guide
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Originally posted on the Northstate Equity Real Estate Blog, here!
The job of a real estate attorney is one that is very important. In order to transfer property from one person or corporation to another, you must go through the process of a real estate closing. Real estate closings in North Carolina are always completed by licensed real estate attorneys, but this is not the case for every state. Be sure to familiarize yourself with your state’s laws and regulations regarding real estate closings.
We are not attorneys and this blog does not constitute as legal advice. Always consult with your attorney before making any decisions.
The Contract is Signed
Every real estate closing first begins with a buyer and seller signing an offer to purchase agreement. An offer to purchase agreement, or OTP, stipulates what each party is on the line for in a real estate transaction.
Things included in an OTP are:
Once the OTP is signed, a buyer usually has up to three days to deposit their earnest money deposit. An Earnest Money Deposit, or EMD, is good faith money from the buyer that shows their seriousness about buying the property.
Title Work Begins
The first step for a real estate attorney in a real estate closing is completing the title work. Title work shows everything a seller has done to their property since they purchased it. An attorney does this by checking the register of deeds in the county the property is in. Attorneys look for things like deed of trusts (mortgages), any liens against the property, any easements recorded, among other things.
If you are looking for a great, experienced real estate attorney in NC, look no further! Kohn Law in Raleigh is our go to!
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Title Work is Sent to Title Insurance Company
In North Carolina, attorneys must collaborate with title insurance companies in order to facilitate a closing. They do this so that both the attorney and the title company are able to be on the same page, and to show that the title that is being transferred is clear. Once an attorney completes their title work, they will then draft a preliminary title opinion, or PTO. Included in a PTO is all of the recorded instruments that affect the subject property. Once the title company gives the attorney the green light, the attorney is then ready to move to the next step.
Some title insurance companies in NC are: First American Title, Investors Title, Chicago Title, and many more!
Documents are Prepared
After the attorney gets the green light from the title company, they are ready to prepare the necessary documents. These documents include a deed, a deed of trust, and any satisfaction or cancellation agreements for the seller’s existing mortgage. In addition, the attorney also prepares a HUD-1 or an ALTA to show where the funds in the closing are going to. These documents are used by the IRS to confirm that everyone got the funds they were entitled to.
Funds are Sent to Escrow Account
After the attorney has prepared all the necessary documents, they are ready to receive the funds from the buyer to complete the real estate closing. Since they have drafted the documents that show where every penny is meant to go, they’ll tell the buyer to send a precise amount of funds after any deductions or credits. After the attorney has received the funds, they are ready for closing day!
Closing Day!
The day we’ve all been waiting for! On closing day, typically the buyer and seller will meet in the attorney’s office and the attorney will have everything they need to sign prepared for them. Both parties will sign the HUD-1 or ALTA, the seller will sign the deed, and the buyer will sign any disclosures or agreements necessary for purchasing their new home. Once all of that is signed, the attorney will record all of the necessary instruments in the register of deeds.
The Funds are Disbursed
The final step of a real estate closing in North Carolina is appropriating the funds to the necessary parties. Only after every necessary instrument has been recorded is the attorney able to disburse the funds. After everyone receives their money, and the buyer gets the keys to their new property, the closing is complete!