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HOW TO HAVE A SMOOTH CLOSING, PART ONE, SELLERS

     I first wrote this list years ago for my first web site.  How times have changed! Now there are pressures in the marketplace to accomplish the entire process of home-buying and home-selling by using the mobile device in your hands. From looking for homes, to signing contracts, to applying for a loan, to transferring funds for closing to signing the closing documents, to recording the documents at the courthouse, the entire process can (in theory) be accomplished without ever having to get into your automobile or see another human in person.

     The reality in 2018 however is that only parts of the process are accomplished electronically. Usually our “closings” involve real people sitting around a real conference table.  The participants are happy and sad,  filled with hopes and dreams for the future on the one hand and fond family memories and melancholy on the other.  It is, without question, my favorite part of the entire process; the signing of the deed and the delivery of the keys harken back to the “Livery of seisin”, later sometimes called the “turf and twig” ceremony…but that is a topic for another day.

Today’s topic is what should Sellers be aware of in preparation for a smooth (happy and sad) closing.

< ![if !supportLists]>1.       < ![endif]>Make sure that your driver’s license name matches the name on the deed when you purchased. If you have changed your name by marriage for example, please provide that information to the closing agent as soon as possible.

< ![if !supportLists]>2.       < ![endif]>If you cannot attend your closing and need to use a Power of Attorney (POA) to authorize someone to attend for you, make sure that the closing agent knows this well in advance, and can either review the POA document you already have or prepare a new one for you.

< ![if !supportLists]>3.       < ![endif]>If the seller is the representative of an estate or a trust or a business entity like a corporation or LLC, make sure that you provide all of the papers available which prove your authority to sign. Examples would be probate documents such as Wills and Letters Testamentary, memorandum of Trust documents, Operating Agreements for LLCs, etc.  When in doubt, call the closing agent as soon as possible to discuss.

< ![if !supportLists]>4.       < ![endif]>If the closing agent sends you a “Sellers Information Sheet” please fill it out thoroughly including social security numbers, loan numbers and written authorizations to obtain payoffs, and HOA contact telephone numbers.

< ![if !supportLists]>5.       < ![endif]>Lastly and most importantly, if you don’t wish to walk out of your closing with a paper check, please be prepared to provide written wiring instructions in advance and to verify them before the funds are sent. The theft of money from real estate closings is an enormous problem in this digital world.  The following language appears on every email sent by anyone in our office.

                 PLEASE NOTE: We Do NOT request or accept changes to wiring instructions via email or fax and without verbal confirmation from our office.

Be smart about using email.  Closely examine any emails you receive to verify that they are from who they say they are from. Fraudsters can change one number or one letter to an email address and fool most people most of the time.  Do not discuss wire transfers with anyone other than your closing agent, after you have verified that they too are who they say they are.  You cannot be too careful. The horror stories about sellers and buyers losing their life savings are unfortunately true and heartbreaking.

Next time, we will work on the Buyer’s side.  Until then, be smart with your technology.

Good Day!

Last week I had the pleasure and privilege of attending a Real Estate Seminar put on by my friends at Old Republic Title Insurance Company.  And while it was very interesting with various speakers talking about such diverse matters as Ethics and Claims Avoidance, the topic that made the greatest impact on me, for my day to day business, was entitled “Business Email Compromise Fraud.”  Or maybe it was just the speaker.  He was quite impressive, quite informative and what he had to say was quite frightening.  And while I certainly cannot present the material the same way, I am willing to discuss with any of our local real estate agents or investors, in person or in a group, the dangers of Cyber Crime, and to use the speakers phrase, “how to become a harder target”.

Let me know if this is something you might have an interest in learning a little more about.

A group of questions that I encounter constantly is “What is the best way to hold title to my properties?”. 

Should I put my homes into a Revocable Trust or a Family Limited Partnership? 

What are the advantages of using corporate vehicles like Limited Liability Companies (LLCs) or S-corps?

What is the difference between Joint Tenancy deeds and “regular” deeds?  What’s a Quitclaim deed?

How can I avoid the need for a Will?

     These are very important questions for sure, and every type of instrument has its value, in the right context.  And it should be obvious from the foregoing that some thought and care should be given to these types of decisions.  Back in the day, when we were really busy, we didn’t give that much thought to requests for deeds.  We would draw them up, slap a “no warranty of title” disclaimer on them, collect a very small fee and send them to the courthouse.  That process came into sharp focus more than fifteen years ago because of the following true story.

     We were doing a residential real estate purchase closing for a middle aged couple, and, after explaining the advantages of that type of ownership, as a favor to them, had the seller convey title to them as Joint Tenants with the rights of survivorship.  (More on the specific advantages and disadvantages of that type another day.) There were no problems with the closing and everyone left happy.  Some months later, the husband and wife returned and asked that we prepare a new deed from themselves to themselves and their 2 adult sons as joint tenants together.  The stated goal was to allow the sons to get the property, when they passed, without having to probate a will.   So, without much discussion,  the deed was drawn, the fee was charged, and the deed was signed and recorded.  A number of months passed and the father shows up unexpectedly at the office one day saying he wants to undo the deed and take the sons off of the title to the property immediately.  He wants to refinance and needs to have title only in his and his wife’s names.  “Put it back like it was before!”  I say OK, bring them in and I will prepare a deed for them to convey the title back to you and your wife.  He says, “nope, can’t do that, they refuse to sign anything.”  I say, “hmmmm, well, now that’s a problem.  You mean to tell me that your sons won’t give you back what you gave them 3 months ago?  They won’t do what you ask?”  “Nope.”  He left very unhappy.

The moral of the story is a little knowledge is a dangerous thing.  Or what works in one situation, may not work in another. Or sometimes, cheap estate planning is not the best way to go.

If you have questions about home ownership, estate planning, liability avoidance or whatever, it’s best to take a few minutes, sit down with your favorite lawyer and lay out all the facts. It could be the best investment of time you ever make.

Have a great weekend.