Real Estate Closings
What Are Escrow And Prepaid Expenses In Real Estate?
The matter of escrow and prepaid expenses will depend on whether we are addressing the buyer’s or seller’s responsibilities because in a real estate transaction, they are distinct and separate. All states are different, but in Massachusetts, prepaid expenses can involve items that have already been paid in advance by the sellers. For example, if the real estate taxes cover the period of January to August, and if the transaction takes place in July, whatever the seller has paid in advance will have to be prorated and reimbursed by the buyer at closing. This can also apply to final water and sewer, depending on the county where the property is located. If any item has been prepaid in advance by the sellers, the buyer would have to reimburse those costs at closing. It is hard to ascertain what those numbers are because we really do not know when the closing will take place and it all depends on when the actual closing takes place.
Your lender may also include prepaid expenses such as property taxes and home owners insurance payments which are part of your monthly mortgage payments. The lender will typically hold a certain amount in escrow as a cushion to make your escrowed payments for you as they become due. Any amount held or left in escrow belongs to the Buyer/Borrower and will be refunded if the property is sold or refinanced.
Where Does The Real Estate Closing Actually Take Place?
Nowadays, most real estate closings are happening in the office of the closing attorney. If I represent you as your attorney, the closing will take place in my office, and we will do an electronic recording of the closing documents. The closing can also take place at the county registry of deeds where the closing documents are required by law to be recorded.
What Exactly Happens At The Closing On A Property?
The lender will provide the closing attorney with closing documents which the Buyers will need to sign at the closing. The attorney will review the closing documents and explains it to the Buyer to make sure that the Buyer understands it. After the attorney has explained each document, the Buyer is then required to sign all documents. The documents to be signed includes amongst others, the Mortgage and Promissory Note. The Buyer is provided for their record, an exact copy of all documents that they signed at the closings. After all the documents are signed, the municipal lien certification, deed, mortgage and any other documents needed to clear title are recorded. The deed is the document that essentially transfers title to the Buyer. Once the documents are on record, the Buyer becomes the official title owner of the property.
Can A Party Pull Out Of A Transaction During A Real Estate Closing?
Although this rarely happens, as most parties in a transaction are required to operate in good faith, nonetheless, the answer is yes. Anything is possible. The seller or buyer may change their mind at the closing for whatever reason. If the reasons are subjective and they are not willing to resolve it, they certainly may be opening themselves to lawsuit for breach of contract. The first contract between the parties is an accepted offer. When a buyer goes shopping for a home, and finds a property, the first step is to put in an offer to purchase. The seller will take a look at the terms of the offer, and if the seller is interested in the terms that have been presented by the buyer, the seller will accept that offer. At that point, the buyer will put down a deposit to bind the offer. If the buyer breaches the agreement that has been accepted, the seller may be entitled to keep their deposit if the seller is not in breach and the terms of the agreement allows it. In other words, if the buyer breaches the agreement, they can lose or forfeit their deposit. The closing is the final stage of the transaction. And usually at this stage, the parties have changed position in detrimental reliance that they have a valid contract and each party will operate in good faith to consummate the contract. Any deviation from a good faith performance by either party may be a breach entitling the non-breaching party to monetary damages.
For more information on Escrow And Prepaid Expenses In Massachusetts, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (978) 323-7880 today.
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