When we sit down to close a transaction, hopefully it’s a very smooth and simple event. What ‘should’ happen is the review of a LOT of documents, tons of signing, initialing and some witty banter around the closing table. The concept of ‘all the attorney did was shove papers at me and said sign here’ is actually somewhat how a closing should be—however, hopefully all parties walk out of my closing with some semblance of understanding what just happened and what they signed! What you may not know is how much that actually happens behind the scenes prior to closing. One major thing that I have to do is clean titles. Let’s talk about common issues (and some NOT so common ones!).
Open Loan Deeds. Open loan deeds are the bane of closing attorneys’ existence! The role of the closing attorney is to convey clear title to the buyer and insure that the lender is in the proper ‘position’ as it relates to liens. If a loan was previously closed out but not cancelled in the public records, we have to ‘get rid of it’ and get in cancelled, released or obtain clearance from our title company that we can move forward. This topic will be covered in a follow-up newsletter, but suffice it to say that this issue creates a lot of confusion with clients! As an example, you know, the bank knows, and even I know that a loan was closed out in the bank’s system—but regardless of that fact, if it’s open in the public records, it is not ‘closed’ for title purposes and we must clean it up prior to closing.
Tax Liens. Ah, death and taxes… If you don’t pay your property taxes the county gets fussy. They will file tax liens on your property and can even SELL the property in a tax sale. We have to get proper written payoffs and pay any liens to clear the title. Usually this is a simple situation; it’s a bit more work if the taxes have been sold to a collector. If you have Federal or State income tax liens, we MUST get a payoff from the proper Federal or State agency. Tax liens (both property and income) don’t ‘go away’ and have to be cleared.
HOA or Condo liens. What if you have a Homeowner’s Association and you owe them money? We have to get payoffs from that HOA. If it’s professionally managed, that can be a simple call or email. If you have to call Fred the treasurer, as long as someone can find out how to reach Fred (and if he calls back) then we can obtain a payoff or release. That can be troublesome at times.
Contractor’s liens. So you added on a bathroom and you didn’t pay the contractor. Guess what? They can slap a lien on your house! The good news for most owners is that the lien process is VERY detailed and if they screw it up, the lien is not valid. So pay your contractors on time and you shouldn’t have to worry! If not, then we’ll have to get a written payoff as well.
Divorce or other legal proceedings. These can be liens against property so we have to research to see confirm the status of any lawsuit. As long as something is ‘open’ we have to more or less ask ‘permission’ to close (ditto for Probate and Bankruptcy situations).
These are just a few items that we deal with on a daily basis, though it seems like new 'stuff' shows up every day! Even after 20 years, I am surprised to learn something new more often than you'd think. Someday I'll tell you about the gentleman refinancing who didn't own his condo... (it's a long story ; )