FAQ about real estate closings

FAQ about Your Real Estate Closing

What is a closing?
After you have entered into a binding real estate contract, your closing attorney takes important steps that result in the effective transfer of title between you and the sellers, including reviewing your contract; searching the title to make sure it is clear, marketable and insurable; coordinating with you and your Realtor, lender and others; preparing legal documents; handling legal and other issues; handling funds; and meeting with you, your Realtor and the seller to execute documents for recordation at the courthouse. This process is termed a closing or settlement. Most occur within 45 days of contract. The refinance of an existing loan also entails a closing.

Why do we need an attorney to handle our closing?
A home purchase is one of the most significant financial events to occur in our lifetimes. The stakes being high and the process technical, Virginia law (CRESPA) permits only attorneys and certain licensed lay (or non-attorney) title/settlement agents to conduct real estate closings. Only attorneys, however, are permitted to draft, interpret, and explain to you critical real estate documents (such as deeds, deeds of trust, and promissory notes); provide legal advice; and advocate for you if controversy arises. The law guarantees your right to choose who handles your closing. The closing fees for a lay settlement agent and a lawyer are comparable notwithstanding the additional services provided by an attorney.

What are “closing costs” and how are they determined?
All closings entail fees and costs. Loan fees vary but often include an origination fee (percentage of loan amount) and an appraisal fee ($400.00 average). Your closing attorney or lay settlement agent will charge a fee ($595.00 average for either). Recordation fees and title and hazard insurance premiums are dictated by the purchase price and/or loan amount. Often, the unique character of your property, loan, and title necessitate additional fees, such as for surveys and mortgage insurance. Paying with cash reduces closing costs! To determine closing costs, you may request a good faith estimate from your lender or contact Arthur Shaheen or Sarah Moore at the The Shaheen Firm, P.C.

What is title insurance &
why do I need it?
Owners’ Title Insurance protects you/your ownership from title problems or defects that may exist in your chain of title. The premium is paid once, at the time of closing, and provides coverage for as long as you own the property for defects that may exist back in time. Some title defects are discovered by the search and can be remedied before closing, such as unreleased deeds of trust/mortgages, tax liens, unpaid judgments, missing signatures, and encroachments. Other defects cannot be detected prior to closing, such as forged documents, missing heirs, claims of former spouses, non-recorded easements, and fraud, which is why title insurance is so important. Lenders always require you to purchase title insurance for them (for the loan amount only), but to protect your own equity/interest, you should purchase an owners’ title insurance policy. The rates are best when the insurance is purchased at closing. Our law firm is affiliated with Patriot Title Company, a title agency for First American Title and Fidelity Title, two of the largest in the United States. Contact Arthur Shaheen or Kristy Hudson at The Shaheen Firm, P.C. for quotes and applicable discounts.