Frequently Asked Questions

1. What is the function of the closing attorney?

2. What must be done to hire an attorney for a closing?

3. What is a Title Search?

4. What does the attorney do with the Title Search information?

5. What is a Survey?

6. What is a Termite Inspection and why is it needed?

7. Why must I have Hazard Insurance or flood insurance?

8. Why do I need a Title Binder?

9. What is the Loan Package?

10. What loan closing documents does the attorney prepare?

11. What is the Closing Statement or HUD1?

12. What actually happens at the Closing?

13. Who is the loan closing attorney’s client?

And the Answers

1. What is the function of the closing attorney?

The function of the closing attorney consists of several steps. There are activities which take place before the closing which include the Title Search, evaluations of possible Surveys and Termite Certificates, evaluation of hazard insurance policies and possible flood certificates and insurance, ordering and receiving the loan package, determining what documents which must be completed by the attorney himself, determining what information each lender form needs, and completing the HUD1 or Closing Statement. There are the activities of the closing itself including having all the appropriate documents signed, explaining lender’s and owner’s title insurance and explaining homestead exemption. There are, then, the activities which take place after the closing but which must be properly completed for the closing to be final, such as disbursing the closing proceeds, the disposition of the records created at the closing, and transmitting all the documents and payments to the proper persons or institutions. Back to Top

2. What must be done to hire an attorney for a closing?

The person who is paying the attorney fees of the closing decides which attorney to contact for the loan closing. The attorney should be on the approved attorney list of the lender from whom the buyer receives his loan. To set up the closing, the attorney should be notified of the address of the property being sold, the name(s) of the seller(s), the name(s) of the buyer(s), the real estate agent(s) involved, the name of the lender and the prospective closing date. Much of this information is contained on the contract agreed to by the buyers and the sellers, therefore, the attorney needs a copy of the contract. Back to Top

3. What is a Title Search?

A title search is an examination of the records about the property being purchased. A title search involves checking many different types of physical records at the court house. Back to Top

4. What does the attorney do with the Title Search information?

The attorney evaluates and analyzes the data from the title search in order to determine what actions must be taken to provide the purchaser with clear title. If there are any liens, unpaid or uncancelled mortgages or back taxes due, then all these must be satisfied. Many times this will involve obtaining payoffs of liens or taxes and cancellations of paid mortgages to allow the closing to take place. The attorney next analyzes any exceptions to the title. These may be utility easements, prior mineral reservations or subdivision covenants and/or building restrictions that are permanent restrictions on the property title. He then determines, after advising the interested parties, if the purchaser and/or his lender will be able to live with these exceptions. Back to Top

5. What is a Survey?

The report of a Survey describes the property in such a way that the attorney can determine if the property

  1. has access to a public road or has a chain of easements running to a public road.
  2. has improvements such as a house, barn, or other structures on the land surveyed
  3. has a valid legal description and closes, i. e., forms a concise, specific tract with definite corners
  4. has no improvements located in any easements of record
  5. has no setback line, protective covenant or building restriction violations. Back to Top

6. What is a Termite Inspection and why is it needed?

If the contract or the lender requires a termite inspection, the attorney obtains a termite certificate from a licensed termite company. The attorney must evaluate the certificate to determine if the report discloses the presence of

  1. any current or past termite activity
  2. any current or past termite treatments
  3. any conditions conducive to termites
  4. whether any treatments or other corrective means are to be taken. If so, the attorney then works with the termite company, the sellers and/or realtors to make sure treatments and/or repairs are done. The word “termite” in this paragraph is a generic word that also includes other wood destroying insects, e. g., carpenter ants and the conditions which encourage infestations, like wood decay or rot. Back to Top

7. Why must I have Hazard Insurance or flood insurance?

The lender requires hazard insurance to protect them in case of disaster. If a house is located in a flood plain, the lender will also require flood insurance. Many times, the attorney must evaluate a flood certificate, ordered by the lender, to determine if the property is in a flood zone and thereby requires flood insurance. Back to Top

8. Why do I need a Title Binder?

A Title Binder shows who owns the property; what defects of title, if any, exist and how these defects will be addressed before or at closing. The attorney obtain a title insurance binder or commitment because most lenders require either the buyer or the seller to the transaction to obtain lender’s title insurance for the lender. The committment states that upon certain steps being taken (and lists exactly what those steps are), a title insurance company will insure the lender’s interest (and the owner’s interest if the owner buys owner’s title insurance to protect his own investment) subject only to those exclusions on the sales contract or subject to those permanent restrictions on the title, such as prior mineral rights reservations, easements and covenants. Back to Top

9. What is the Loan Package?

This package in many cases will exceed sixty (60) pages and will include the lender’s required documents and the instructions. Back to Top

10. What loan closing documents does the attorney prepare?

In addition, the attorney prepares warranty deeds, mortgage exhibits, title insurance affidavits, hold harmless agreements, the Closing Statement or HUD1 and any other documents he deems necessary to set up the property closing. Back to Top

11. What is the Closing Statement or HUD1?

The settlement or closing statement, sometimes called a HUD1 form shows exactly how the money in the closing will be distributed. In preparing this multipage document the attorney verifies that all mortgage lender fees, lien payoffs, realtor fees and other closing costs accurately appear on this form and are properly allocated between the buyer and the seller, complying both with the lender’s instructions and the sales contract. Back to Top

12. What actually happens at the Closing?

The attorney, with the assistance of and usually in the presence of, the buyer, seller, real-estate agents and other interested parties, will close the transaction. He will make sure that all documents are properly signed and notarized. Sometimes the attorney must act as a referee between the parties and try to resolve any disputes that might arise. In doing this, the attorney must be certain he is complying with the loan closing instructions, the sales contract and his duties to his client. The attorney also makes certain that all parties at the table receive copies of the documents that they have signed or to which they have a vested interest. Back to Top

13. Who is the loan closing attorney’s client?

In a loan closing, as in other matters, the attorney’s client is the one paying the attorney’s fees as specified by the contract and as shown on the HUD1.

If you are paying for the attorney, it is your choice and yours alone as to which attorney to use. Please give us the opportunity to earn your business. We will do everything possible to make the process smooth, efficient, effective, pleasant, and economical. We are highly motivated, self starting and both dedicated and detail oriented. Please feel free to contact us. Information may be found on the “Contact Us” page. We are here to serve you. Back to Top

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