The Role of A Closing Attorney in a SC Real Estate Transaction
March 10, 2017
By Holly Hamilton, Broker Associate, Realtor, Daniel Ravenel Sotheby’s International Realty
For most people, meeting with an attorney is a very rare occasion. Creating an estate plan or making a real estate purchase, might be the only times they will meet with a lawyer. However, there is much more to a real estate closing than the 45 minutes spent at a conference room table signing documents. So maybe you’ve wondered … what exactly happens before and after closing on a home in Charleston SC? You know how long it takes for FIND your home and get a contract. It’s then, that the attorneys get to work. I sat down with Jennifer Flanagin of Kase and Associates to chat about what goes into a closing. Here’s an overview of the process.
The state of South Carolina requires an attorney to be present at the closing of a real estate transaction and has issued extensive best practices guidelines. The SC Supreme Court has listed the essential components of a closing as 5 categories: title search, loan documents, closing, recordation of documents, and disbursement of transaction funds. This is where you want (and need) to have the representation of a lawyer, as each of these steps must be supervised by an attorney in order to protect SC real estate consumers.
STEP 1: RECEIVE THE CONTRACT
This is the first step in making this house yours. Once you receive the contract, the role of the closing attorney is to reach out to all parties to gather information on the transaction required of each the buyer and the seller.
For the Buyer: The attorney coordinates with the lender to obtain the banking documents, as well as keeps tabs on receiving Inspection reports, and orders a “title abstracts.”
For the Seller: The attorney gathers the information about mortgages that need to be paid off, loan insurance, inspection reports, and homeowner documents.
STEP 2: EXAMINE THE TITLE TO THE PROPERTY
Learning the history of your soon-to-be property. Examining a title means to research the chain of ownership (or deeds from one owner to the next) going back at least 61 years for the particular parcel of land. The examiner looks to verify that all mortgages or liens against the property have been satisfied, and lists any easements or defects in title. Often a title search requires research on the exact parcel that has been deeded. Over the course of the prior decades, the piece of land could have been combined or divided.
STEP 3: APPLY FOR TITLE INSURANCE
Securing your purchase. Once a clear title is determined and the attorney has issued a “Title Opinion,” the office will apply for title insurance. But what is title insurance? It’s a binder and policy that insures the good title of the property so the lender is assured it can be used as collateral for the loan.
STEP 4: COLLECT AND PREPARE DOCUMENTS
Getting your ducks in a row. The attorney’s office will collect all the documents from the lender, and the disclosures and more from the realtor’s closing coordinator. Then the deed and settlement statement are prepared. A full package of all the necessary paperwork to finalize the purchase are readied.
STEP 5: CLOSING DAY
The house is almost yours. Parties meet at the attorney’s office where the attorney explains all the legal documents to the parties and walks each party through what needs to be signed, and how it affects that party. A buyer can expect the closing attorney to fully explain the loan documents (interest rate, amortization schedule, late payment or prepayment penalties, term of the loan and maturity date, events of default, to name a few). After a few signatures – and maybe a handshake or two, you will receive the keys to your new home.
STEP 6: DISBURSEMENT
Tying up all loose ends. The attorney serves as the clearing house for all the funds to be brought to closing: the lender, the seller, the buyer. These funds are held in a trust account until disbursement. Then, the attorney coordinates the payment based on the settlement statement. Prior mortgages are paid off, bills from third parties that were included in the transaction, commissions, and seller’s funds.
STEP 7: RECORDING THE LEGAL DOCUMENTS
Making it official. All executed and pertinent documents to the transaction are filed in the appropriate public records and proper indexing is verified. The attorney’s office then continues to follow up with the lenders to make certain the satisfactions of liens/mortgages are filed where appropriate, and file for the final title insurance opinion. The buyer and seller receive original documents that have been filed and a record book of the transaction.
Note: At Daniel Ravenel Sotheby’s International Realty, we make sure our clients are fully in the loop as they move through the process of closing on real estate purchase. Our job is to handle the details of the transaction so that our clients can focus on the important decisions. We work tirelessly to oversee the entire closing process including the coordination with attorney and lender. You can read more about the relationship of law and real estate here.