By Ryan McNeill, Attorney
If you are a first time homebuyer or are buying a home for the first time in a long time, the real estate closing process can be very intimidating. Since a home is usually the biggest expenditure a person will make during his/her lifetime, the decisions you make in this process are extremely important. As a purchaser you will want to form a team of experienced professionals to educate you and to help you move through the process. A good start will be to find a realtor to help you search for property, a mortgage loan officer to find out your financing options prior to making an offer, and a real estate attorney.
The starting point in buying real estate is the Offer to Purchase and Contract, which is the document that you will send to the seller to indicate your terms of purchase. I recommend to my clients that they review this document with their realtor and attorney, because once it becomes accepted by the seller it controls all of the important terms of the purchase. Keep in mind that in North Carolina a contract for the purchase or sale of real estate must be in writing in order to be valid, so a gentleman’s agreement over a handshake will not be enforceable in court.
One of the most important parts of the real estate contract is setting up an appropriate time for inspection of the property by home and pest inspectors and so that you have time for a personal inspection. The contract needs to provide enough time for that inspection and an ability to terminate the contract if the estimated repairs are over a certain dollar figure.
After the offer has been made, the seller can choose to either accept or reject the offer. It is important to understand that if the seller accepts the offer in its entirety, then the contract has been made and that you move forward with the process. However, if the seller rejects any part of the offer, whether that be the purchase price, time of closing, or other contingencies, then any counteroffer made back to the buyer (even if it is very close to the original offer) must be accepted by the buyer to create a binding contract. The terms of the contract typically control the last date by which closing can occur, although a buyer and seller may enter into a written agreement for extension of this time period if something delays closing.
When an offer has been made and accepted, your closing attorney will need to be notified so that a title search can be performed. In a title search the closing attorney will make sure that the sellers are capable of delivering clear title to the property. If there are any title issues discovered, then you have the option to give the seller additional time to correct the title issue (if possible), or the contract may be terminated if the seller is not able to correct any title deficiency before the date set for closing. We also recommend that you have a survey performed to make sure that there are no encroachments onto the property. The most common issue of encroachment occurs where a fence is built on the wrong side of the property line, but bigger issues of encroachment can occur when a garage or other permanent structure is built over a property line.
At closing the seller will deliver to the closing attorney an executed deed and several other necessary closing documents. If you are financing through a bank, you will sign all the necessary bank paperwork to reflect the loan you are receiving, together with a deed of trust granting the bank a security interest in the home. The time frame from start to finish mostly depends on the bank process, as some banks have a long waiting period and others are able to process things more quickly, which is another reason to have spoken to a bank loan officer prior to making an offer. Provided that there are no title issues a typical closing happens within 30-60 days of the final acceptance of the offer.
Contact our experienced real estate attorneys at Brinkley Walser Stoner if you have any questions about the real estate closing process or need a title search or closing services.