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Closing or 'settlement' is the process of completing a real estate transaction. During
closing deeds, mortgages, leases or other required instruments are signed or delivered.
Furthermore accounting between parties is made, monies disbursed and recording of all
pertinent documents.
What should we do to prepare for the settlement?
Buyer
Power(s) of Attorney (if any) must be reviewed and approved by the mortgage and the
title company prior to settlement. The Original must be presented at settlement to be
recorded with the mortgage. You should review the title report.
Seller
Power(s) of Attorney (if any) must be reviewed and approved by the title company prior
to settlement. The Original must be presented at settlement to be recorded with the
deed. You should review the title report. Pay particular attention to the mortgage(s),
judgment(s), and tax liens listed on the report against you. If there is an mortgage,
judgment or other lien shown on the report which you have paid or you were not
aware of, contact us prior to settlement directly or through your agent or attorney.
What do I need to bring to settlement?
Each party needs to provide official photo-ID (e.g. drivers license, passport). If you are
required to bring funds to the settlement they should be in the form of a cashiers,
treasurers, teller's check, money order, or certified personal check (made payable to
Pennsylvania Land Transfer or to yourself). Only small amounts of cash are acceptable.
How long will settlement take?
This depends very much on the case involved, but usually settlement will take about an
hour for a sale and about 40 minutes for a refinance.
Who attends settlement?
With a sale the buyers, sellers and their respective attorneys and/or real estate agents
will attend. Most lenders forward their documents and instructions to the title company
without sending a representative.
Do I need to be present at settlement?
We prefer you to attend personally. When this is impractical, it may be possible to
prepare a 'power of attorney,' which will allow someone else to sign the documents on
your behalf. The Power of Attorney document must be reviewed and approved by the
title company (and lender if Power of Attorney for borrowing) prior to settlement and
the original Power of Attorney will have to be recorded.
Who does the title company represent at settlement?
A title company does not represent any one party. The transaction has already been
negotiated and they are there to ensure the terms are complied with to the extent they
affect the insurability of title or are required by the lender.
What happens at settlement?
In a nutshell, the title company completes the settlement in accordance with the terms
and conditions of the Agreement of Sale and Mortgage Company instructions. Prepares
the final HUD-1 (settlement sheet), and makes all of the disbursements in accordance
therewith, and forwards the executed documents to the appropriate parties.
What is a HUD Settlement Statement (HUD-1)?
This is a summary of the financial portion of the real estate transaction. The HUD will list
the purchase price, loan amount and closing costs for both buyer and seller and show
all pro-rations and sums to be disbursed by the title company to all parties.
What is pro-ration of property taxes?
This is the process of crediting either the buyer or seller for their share of real estate
taxes either paid or owing as of the date of settlement.
What is pre-paid interest?
This is interest due from the date of a loan closing to the first day of the following
month. Most loans require payments to be due on the first day of the month. Each
monthly payment reflects the principal and interest due on the loan for the previous
month. A loan closing on the 20th day of the month will require interest adjustment to
the 1st day of the following month. The first payment will then be due on the 1st day of
the month following. For example if your settlement is on October 15 and your first
monthly payment is due December 1, the lender will collect interest to cover the period
from October 15 through October 31. The December 1 payment covers the accrued
interest for the month of November. Interest adjustment is considered a settlement
charge and will be disclosed on the HUD.
What is an Escrow?
An escrow is an arrangement with a third party, who holds funds and/or legal
documents on behalf of the buyer or seller, and distributes them according to the
instructions given by the buyer or seller. Often a buyer may be required, or elect, to
escrow 1/12th of the annual taxes and insurance. The amount of tax escrow needed at
the time of settlement is determined by the first mortgage payment date and the date
by which the taxes may be paid at the discount rate.
(information from http://www.palandtransfer.com/faq.html)
