This guideline was created by Tiffanie Vendryes, LLC to better serve our clients. We aim to deliver real estate knowledge, client focused service and unparalleled integrity. This guideline does not serve as or intend to replace legal advice. The following are key terms, periods and procedures which present themselves throughout the closing process.
Escrow Deposit – This is the initial deposit due with the offer. This deposit signals to the seller the buyer is serious. The escrow deposit will be released to the buyer in the event the buyer cancels the contract within the inspection period due to any findings from due diligence. The escrow deposit will also be released during the loan commitment period due to lack of financing from a lender. Depending on the contract there are other scenarios under which the escrow deposit can be released to the buyer.
Escrow Agent- This is the title company or law firm which holds the escrow deposit until closing or until a release of funds has been signed by both parties of the contract.
Title Agent – This is the agent responsible for ordering and requesting all documentation necessary for closing.
Loan Application – During the loan application process the lender will ask the buyer for verification of income such as 1099, W-2, tax returns and pay stubs. In order to expedite this process it is recommended that the buyer have these documents scanned and ready for electronic delivery to the lender.
Seller’s Disclosure – This document will inform the buyer of any known issues with the condition of the property.
Condo Questionnaire – This is given to the buyer by the lender. The lender uses the answers from the condo questionnaire to assess the down payment requirements. If the condo has any issues the lender can bypass condo review and in such event the buyer would need to make a minimum down payment of 25%. Most condominium associations charge a fee for filling out the condo questionnaire.
Inspection Period – The inspection period is the timeframe within which the buyer can cancel the contract and have the escrow deposit returned. The inspection, review of the findings and repair/credit requests need to be done during this time. The inspection period can be extended if the buyer needs more time to inspect and negotiate repairs or credits.
Note: In the event where the buyer is unsure of whether to do the condo questionnaire or the inspection first, it is advised to do the process which may result in negative findings first. If the buyer is in a situation where the condo may have issues with their reserves then order the condo questionnaire before proceeding with the inspection. If the buyer is in a situation where the inspection may reveal something about the property which may change the desirability of the property then order the inspection before the condo questionnaire.
HOA or COA Application – After the inspection and the condo questionnaire. It is advised for the buyer to begin the application process with the association. This process may take anywhere from 7- 30 days depending on the association. Some associations do a full background and credit check. Others don’t have an application for home buyers only for rentals.
Appraisal – During the lender approval process the lender will have the buyer pay for an appraisal. This informs the lender of the value of the property. If the appraisal is higher than the contract purchase price then the lender will proceed. If the appraised value is less than the contract purchase price there are a few options. The buyer can cancel the contract, both parties can agree to lower the contract purchase price or the buyer can agree to pay the difference between the contract price and the appraised value. This process is only applicable to finance purchases.
Loan Commitment – The lender will issue a loan commitment after they have received all the necessary documents and have sent the file to the underwriters for review. The underwriters will review the file and supporting documents and issue the loan commitment usually with conditions. The conditions generally include a title commitment, home owners insurance and a property survey.
Title Search – The title company will do a lien search to see if there are parties who have liens or violations on the property. This includes but is not limited to HOA estoppel, tenant estoppel, city lien search, county lien search and city code violation and open permit search.
HOA Estoppel – This document specifies if the seller has been making payments to the HOA.
Tenant Estoppel – This document details the status of the tenants. It will provide information such as security deposit, rental rates, last payment by tenant and the period for said payment.
City Lien Search – The city lien search will provide the account balances with any city utilities including water, sewer and trash.
County Lien Search – The county lien search will provide the property tax balances on the account.
City Code Violation Search – This search will alert the buyer to any code violations attached to the property. All violations should be resolved before closing.
City Permit Search – This will display all of the permits that have been open on the property. The buyer will be able to see what the seller has done to the property and when. All permits should be closed before closing.
Title Commitment – Once evidence of clear title has been provided the title commitment through a title insurance company will be provided. The title insurance protects the buyer from any defects of title that may arise after closing.
Home Owners Insurance – The buyer can request homeowner’s insurance from an insurance broker and choose the coverage which best meets their protection needs.
Survey – A survey is a document that outlines the property lines.
Loan Approval – This is when all the conditions have been met for the lender to release funds for purchase.
Closing Statement – When the title company has the final figures from the lender they will then take all the information gathered and assemble the closing document. It is advised the buyer and seller check this document for any discrepancies and alert the title company before closing.
Closing – This is when the papers are signed and the deed is transferred from the seller to the buyer. This information is recorded with the county.
The goal of Tiffanie Vendryes, LLC is to inform and serve our clients. However, please keep in mind every purchase is unique and there might be procedures which aren’t outlined here.