Welcome to Your Real Estate Sales Journey: Navigating the Legal Landscape with Confidence
Selling a home can feel daunting, but understanding the journey ahead can provide clarity and confidence. At our firm, we break down the process into clear, manageable stages, ensuring you are well-informed and prepared every step of the way. Here's a roadmap of what to expect:
01: Intake & Important Info
This outline is a guideline of what to expect during a typical real estate sale. It was written to help answer some common seller questions and to help you understand how the process works, so you can feel less stressed in this exciting transition in your life. Please read this outline thoroughly and reference it often throughout the transaction, as it is for your benefit. If there is anything out of the ordinary with your contract, we will make sure to discuss this with you as well.
IMPORTANT: You MUST give out [email protected] as an email to anyone you work with – your realtor, your contractors (if you do any repairs), etc. and instruct them that ALL correspondence must be directed to Marianne if it is to be seen and attended to in a timely manner.
There is a tentative closing date listed in the contract. Please note that a variety of factors can influence the closing date – inspection issues, title issues, home sale contingency issues, etc., so the closing date is TENTATIVE and subject to change. Please plan your housing arrangements accordingly.
Please also note that each due date listed in the Contract will be pushed back an amount of days that corresponds with the end of attorney review. For example, if the Contract is signed on October 1, and the Contract states that the initial deposit is due October 5 (five days after the Contract was signed), but attorney review does not end until October 5, the initial deposit will be due on October 10 (five days after the end of attorney review, which is the date you have a firm contract).
NOTE: AS THE SELLER, YOU DO NOT ATTEND CLOSING. YOU SIGN YOUR CLOSING DOCUMENTS IN ADVANCE, AND WE MAIL THEM IN. WE DO NOT ATTEND CLOSING EITHER. YOU CAN EITHER HAVE YOUR CLOSING PROCEEDS WIRED TO YOU THE DAY OF CLOSING, OR THE TITLE COMPANY CAN OVERNIGHT A CHECK TO US, WHICH YOU CAN PICK UP FROM OUR OFFICE OR WE CAN SEND TO YOU.
IF CLOSING IS LATE IN THE AFTERNOON, THE BANKS MAY BE CLOSED, SO IT IS POSSIBLE THAT, EVEN WITH A WIRE, YOU MAY NOT GET YOUR FUNDS UNTIL THE NEXT DAY.
THE BUYER IS STILL ENTITLED TO MOVE INTO THE PROPERTY EVEN IF YOU HAVE NOT YET RECEIVED YOUR FUNDS.
Stage 02: Attorney Review
After the contract is signed, it enters the Attorney Review period, during which time the attorneys review the contract to make sure it is satisfactory to our respective clients. The attorney review period addresses issues like how the deposits are to be paid and to whom, the amount of time buyers have to perform inspections and what they can inspect, for what reasons the contract may be cancelled, our clients' rights in this transaction, and any other items specific to the deal.
Our changes are considered to be incorporated into the contract, and once we reach an agreement, the rest of the process starts to move forward. A new contract is not signed afterwards, though subsequent addenda may be needed for various items like a change in closing date.
Note: The contract states that there are three days for the attorney review period. That is a little misleading. There are three days to BEGIN the attorney review period (which can be extended). Once begun, the attorney review period usually takes several days to a week, depending on how complicated the deal is.
Stage 03: Inspections/Private Well/Municipal Certs
After attorney review, buyers are allowed to perform inspections, usually a home inspection, septic if applicable, termite/wood destroying insect, radon, and a tank sweep. Sometimes the general home inspection reveals that further inspections (like a chimney inspection) will be needed. Once the buyers have those results, they may ask for repairs to be done, and there will be negotiations regarding what you as the seller are willing to repair. Often the buyers will ask to have a contractor come out to look at something the inspector noted to see how much it will cost to fix.
They may also ask you to provide permits or relevant paperwork for any work you have completed on the house, so if you have made any repairs or additions, you may want to start locating this paperwork. The buyers should also pull permits using an OPRA request. You are required to close any open permits at your expense.
Once the negotiations are done, you can get started on completing any repairs you agree to.
If there is a major structural issue that you do not agree to fix or provide a credit for, the buyers have the right to cancel the contract. Even if you are selling your home “as-is,” the buyers can cancel the contract if they find something that is beyond what they were anticipating having to fix.
Below are some repairs that generally will be your responsibility, unless expressly agreed to otherwise:
If it is revealed that you performed work without obtaining the necessary permits, you will need to address this, either by obtaining a permit and inspection or undoing the work.
If the radon levels are not acceptable, you must remediate and provide a test showing that the levels are acceptable after the remediation.
If an underground oil tank is discovered, generally the seller is responsible for removing it and cleaning up any contamination.
If the septic does not pass, the seller is responsible for repairing it unless another arrangement (such as a credit or escrow) is made.
The buyers also have to pay their deposit in this time. We state in our attorney review letters that until the deposit is received, we will not discuss inspection issues.
If you have a private well, you must order a water test. If the water is not up to standard, you must remediate it, or the buyer has the right to cancel.
If you remediate the water, you have to get it retested and show that it passed.
While the buyers are having inspections performed, you must get a Smoke Detector and Carbon Monoxide Certificate. This is required in all municipalities. Some municipalities have something called a Construction Records Clearance Certificate, and/or a Certificate of Continuing Occupany, and/or other certificates such as a water certificate.
You are responsible for obtaining these documents at your expense as well as doing any work/repairs needed in order to obtain the documents. Your realtor should help you obtain these documents.
You cannot sell your property without obtaining the certificates required by the municipality.
Stage 04: Review Title Work & Open Judgements
The buyers will have ordered the title search, which may contain judgments against people with your same or similar name. You will need to review this and confirm whether the judgments apply to you or not. If they apply to you, they will have to be paid off at closing. We will have to contact the creditors and get up-to-date information. If the judgments do not apply to you, but rather to someone with a similar name, you will make a sworn statement to that effect in your Affidavit of Title. It is important for you to be honest here – if there is a judgment against you, we must take care of it.
It is important that you provide your current title insurance policy, so that we can give it to the title company to prove that you cleared title when you bought the house. Otherwise, we may have to deal with judgments against the prior owners. Please make your best effort to locate this very important document. If you cannot locate the document but can find letters from the attorney that represented you, or from your title company, please provide that to us so we can reach out an attempt to locate the title policy.
Sometimes other items appear in the title binder that have to be taken care of, related to the recorded documents in the chain of title and not necessarily to judgments against you. As an example, sometimes two deeds have to be recorded simultaneously, such as from an executor into an estate, and from the estate into a beneficiary. If the second deed (into the beneficiary) was recorded first by mistake, then there is a break in the chain of title that has to be corrected. If we see something like this in the binder, we have to fix it.
Stage 05: Order Final Statements
At this point, generally we will be waiting on the buyer's mortgage commitment, and there are several items which you should order so that you are prepared for closing.
1. Payoff of existing mortgage(s) and home equity lines of credit
Any existing mortgages and home equity lines of credit will have to be paid at the time of closing, so you will need to obtain a payoff statement from your lender confirming the amount to pay off your mortgage in full. Since lenders have gotten very strict about confidentiality, we can no longer order this for our clients. You will therefore need to obtain this, usually within 30 days of closing, either by calling or ordering online. Each lender has a different system.
2. Water and sewer final readings
If your home is being serviced by public sewer and water, you may need to order a reading from your water/sewer companies.
3. Oil and propane final readings
If you have an oil and/or propane tank, you will need to obtain a final reading prior to closing so you can be compensated for anything in the tank. This is a separate item – oil is not considered included in the contract of sale.
Stage 06: Sign Title Documents
A few days before the closing, we will meet you in our office to sign the title documents, which include the Deed and Affidavit of Title among a few other papers. At that point there should be a preliminary HUD (or ALTA and CD) statement prepared by the title company, which we can go over with you to show the closing costs and your net proceeds from the sale, subject to adjustments.
As we receive updates on the HUD statement, we will send them to you via email to review. One of the documents we have you sign allows us to sign the final CD on your behalf on the day of closing, provided we have your authorization, so you do not have to attend or worry about how you can print and fax the signed statement on the day of.
NOTE: AS THE SELLER, YOU DO NOT ATTEND CLOSING. YOU SIGN YOUR CLOSING DOCUMENTS IN ADVANCE, AND WE MAIL THEM IN. WE DO NOT ATTEND CLOSING EITHER. YOU CAN EITHER HAVE YOUR CLOSING PROCEEDS WIRED TO YOU THE DAY OF CLOSING, OR THE TITLE COMPANY CAN OVERNIGHT A CHECK TO US, WHICH YOU CAN PICK UP FROM OUR OFFICE OR WE CAN SEND TO YOU.
IF CLOSING IS LATE IN THE AFTERNOON, THE BANKS MAY BE CLOSED, SO IT IS POSSIBLE THAT, EVEN WITH A WIRE, YOU MAY NOT GET YOUR FUNDS UNTIL THE NEXT DAY.
THE BUYER IS STILL ENTITLED TO MOVE INTO THE PROPERTY EVEN IF YOU HAVE NOT YET RECEIVED YOUR FUNDS.
Stage 07: Walkthrough and Closing
On the day of closing or sometimes the evening before, the buyer will do a walkthrough to make sure that there are no issues that have arisen since the time of inspections.
YOU MUST LEAVE UTILITIES ON THROUGH THE DAY OF CLOSING SO THAT THEY ARE ON FOR THE WALKTHROUGH.
After you have removed all of your personal belongings from the house, please leave it clean. The expectation is that all of your belongings will be removed and the property will be in "broom clean" condition. That means essentially that there is no debris lying about. You don't have to hire a professional cleaning company to leave the place sparkling (although that would be very considerate), but you do have to remove all trash and make sure the floors are swept clean.
Please make sure any appliances and other items that you were supposed to remove are removed and that any that you were supposed to leave are in place. If there is any confusion at all about what was supposed to stay or go, please work with your agent to clarify this before closing.
If you leave things like appliances/furniture you were supposed to remove, broken pieces of glass on the floor, or garbage out in the yard, we WILL hear about it on the day of closing and you will probably have to give the buyer a credit. Likewise if you take something you were supposed to leave this could also cause issues and you may find yourself having to compensate the buyer. So please make sure everything is in order.
At the closing itself, assuming the walkthrough went fine, as long as the final closing disclosure was signed ahead of time, you may not be needed at all. No news is good news in that respect. We will be notified once the closing is done and the funds have been sent out. If we are holding the deposit, we will send that to you in the manner you have requested (check or wire) or you can pick up the check from our office if you are local.
Stage 08: Closure
Sometimes there are escrows held back at closing. After closing, we may still need to complete certain requirements in order to have those escrows released. The most frequent example of this is money held back by the title company while a septic repair is completed.
If you paid off a mortgage at closing, your lender is responsible for recording a discharge of mortgage. You should receive notification that this was done. If several weeks pass after closing and you do not receive any notification, you should follow up with the lender and/or call the county clerk to make sure that a discharge or release was recorded.
If there were any mistakes on the HUD statement discovered after the fact (usually during an agreed-upon term like 30-60 days) both parties agreed in attorney review to fix those mistakes. This happens VERY RARELY, but an example is if for whatever reason your mortgage payoff was wrong and you need to pay a little extra, you agree to provide the additional funds.
If you applied and qualified for a Homestead Rebate, technically the buyers are required to send it to you. However, the tax rebate typically appears as a credit on the tax bill, rather than a check in the mail, so rarely are buyers going to remember to hand it over unprompted months or years after they have bought their house. If it matters to you to get your Homestead Rebate, you can call the county tax office to see if there is a way to have it sent to you instead of appearing as a credit on the tax bill. Otherwise, you will need to follow up with the buyers during the quarter when the tax bill in question comes out.
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By breaking down the process of selling a home into these stages, we strive to provide transparency and support, ensuring you are never in the dark about what comes next. Our goal is to navigate this journey together, with your interests at the forefront.