A real estate deal, mainly residential, is usually time-consuming and stressful, which calls for many procedural formalities. The closing of a residential real estate transaction occurs when the seller signs the agreement papers that prove that the house is now legally yours. However, several steps are involved in reaching this stage, where some are small and others too big.
The step that concerns our concentration area is preparing the closing documents that are a prerequisite to making the deal successful. Closing documents are documents or legal papers used to purchase and sell a residential real estate property legally. Closing documents are signed by the two parties involved in the contract when closing or settling the agreement, viz the buyer and a seller. Nonetheless, we must move ahead and see how the closing documents are prepared to close the deal and who prepares them.[Must be visit here: News Profy ]
Steps To Prepare Closing Documents In A Residential Real Estate Transaction
1.) Interviewing your client:
If acting on behalf of the seller(s), you must confirm the names of the seller(s) as mentioned on the title head of the agreement of purchase and sale. Prepare a thorough client intake sheet so that you ask as many questions as possible. If any seller is a non-resident, be prepared to hold back 25% of the total sale proceeds.
If acting on behalf of the buyer(s), prepare a thorough client intake sheet so that you ask as many questions as possible. To your concerned parties, i.e., sellers or buyers, send an engagement letter to outline your retainer and the list of things your clients have to do. If you act for multiple sellers or buyers, obtain consent to work for all the parties.
2.) Collecting the information:
The standard information that you must gather, including the “Title Search,” which you can order on behalf of the buyer to review the following points:
- Planning Act Ownership to confirm all the owners have executed the agreement of purchase & sale.
- Land titles/registry.
Other information required are:
- PPSA or Personal Property Security Act searches and, if applicable, sellers’ and buyers’ execution certificates.
- Information property insurance.
- The discharge statement must be paid out and deleted from the title on behalf of the seller(s).
- Information on property tax.
- Creating and zoning compliance letters.
- Environmental reports or searches.
- Title insurance coverage options.
3.) Preparing the closing documents at the earliest possible time:
Before drafting the final closing documents, you must carefully review the purchase and sale agreement in total. Upon being retained, gather all information from your client that is essential to complete the documents. Prepare the closing documents well before closing and duly send copies of them to the other law firm.
4.) Knowing the documents that the solicitor of the seller generally prepares:
Depending on the terms of the purchase and sale agreement, a few critical documents that a seller’s solicitor prepares are:
- Electronic Transfer Deed.
- Transfer Tax Affidavit – Buyer.
- Polaris Form Transfer Deed, excluding the Land Transfer Tax Affidavit for the buyer.
- Statements of Adjustments.
- Polaris Form Discharge of Mortgage or Charge.
- And more.
5.) Knowing the documents that the solicitor of the buyer generally prepares:
Depending on the terms of the purchasing and sale agreement, a few critical documents that a buyer’s solicitor prepares are:
- Electronic Transfer Deed.
- HST/GST Certificate.
- Planning Act Statement.
- Declaration of Possession.
- Polaris Form Mortgage or Charge to the Seller.
- And more.
6.) Thoroughly review all the documents received from the other party:
Reviewing all documents obtained from the other party promptly. While studying, make sure that the documents comply with the purchase and sale agreement, and it does not broaden the seller’s responsibilities under the contract. Inform the other party much in advance of the closing about the changes you require in the documents.
7.) Send your documents or the amended documents of the other party to them:
Once the other party’s documents are thoroughly reviewed, you must send them back to the other party to ensure their acceptability to the proposed changes, if you’ve made any, at the earliest and avoid problems on the day of closing.
8.) The decision as to who shall prepare the Transfer or the Deed of Land:
When the time comes to register the documents electronically, you must contact the other law firm to discuss as to who shall prepare the Transfer Deed of Land and give in writing the instructions as to whom the draft of the Transfer Deed should be sent. This is done because there is no clause on this matter in the agreement to purchase and sell.
The Last Step
Reading the steps of preparing the closing document may seem to be long and tedious to you. But, it is better to do the work correctly with time in hand than doing extra work to undo the wrongdoings at the end hour. Do not entertain any pressure to close the deal fast. As a residential real estate Property Manager, you must seek that the process is closed in the appropriate manner and in due time.