Title Tip: The Clocks Are Ticking in The Countdown to Closing
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By Lydia Blair
Special Contributor
The contract has been signed by both buyer and seller. Now it’s the Final Countdown. Cue music. Daa! Da-da-daa!
There are several clocks that start ticking towards closing. They all start and stop at different times. Some clocks count the business days while others count the calendar days. Here’s a simple breakdown of the countdown to closing:
Execution Date – Also called the Effective Date. This is filled in by one of the Realtors after all parties have agreed, signed, and initialed all required parts of the contract. This date determines most of the deadlines for performance.
Contract Delivery – The title company can’t start working on your transaction until they get the executed contract. It’s important to deliver the contract to the title company quickly. Once we have it, our countdown begins.
Earnest Money Due – The buyer must deliver the earnest money to the title company within three days of the execution date. If that delivery date falls on a weekend or holiday, it must be delivered by the end of the next business day.
Option Period – This number of calendar days is negotiated between parties before executing the contract. During the option period, the buyer may terminate the contract for any reason. Typically, inspections are performed and repairs negotiated during the option period.
Survey – When and who provides the survey is negotiated in the contract between parties. Once the survey and affidavit have been delivered to the title company, it is reviewed. The survey is either accepted by the title company or a new survey is ordered.
HOA Documents & Resale Certificate – HOAs are like an entirely different time zone and if you’re not careful, they’re like a time bomb. The deadline for delivering these docs is negotiated. Notice I said ‘delivering’ not ordering. The title company can order these once the seller has given them their HOA contact information. However, buyer or seller must pay for them – usually in advance – before they are processed by the HOA.
By Texas law, HOAs have 10 business days to deliver documents AFTER the order is placed and payment is received. I often see contracts with less than 14 calendar days for HOA document delivery. That usually means someone is going to pay a rush fee to the HOA management company. Their rush fees range from $50 to $350 on top of the cost of the resale certificate if you want your documents in less than two weeks.
Title Commitment – Within 20 days of receipt of the contract the title company must issue a commitment of title insurance and disclose restrictions and exception documents. This is when they research property records, deeds, liens, etc.
Objection Period – Negotiated in the contract, this is the amount of time the buyer may object to items disclosed on the survey or title commitment such as defects, exceptions or encumbrances. This clock starts ticking when the buyer has received both the survey and commitment.
Appraisal – The buyer’s lender orders this during the loan process. Typically the order isn’t placed until the loan app is complete and often after the borrower pays for it in advance. If the appraisal comes back and doesn’t meet lender requirements, the buyer may be able to terminate the contract if it is at least 3 days prior to closing.
Financing Approval – Another deadline negotiated between buyer and seller. This is the amount of time the buyer has to be approved for their loan.
Document Review, Curing Liens, Deeds – These are title company tasks that require time but don’t start until the title company receives documents or information from other parties or sources. Additionally, time is often needed if we find out a property owner is deceased, someone’s marital status has changed, a Power Of Attorney is being used, someone needs to sign documents outside of our office, etc.
Delays in closing can happen when someone doesn’t tell the title company of their unusual situation or they delay in getting us the required information. Often we request information from buyers or sellers. And then we wait. And wait. And remind them. And wait some more.
When you’re buying or selling a property, try to stay on time to help keep your closing on time. Then, tick tock – we’re all happy.
The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.
Lydia Blair (formerly Lydia Player) was a successful Realtor for 10 years before jumping to the title side of the business in 2015. Prior to selling real estate, she bought, remodeled and sold homes (before house flipping was an expression). She’s been through the real estate closing process countless times as either a buyer, a seller, a Realtor, and an Escrow Officer. As an Escrow Officer for Allegiance Title at Preston Center, she likes solving problems and cutting through red tape. The most fun part of her job is handing people keys or a check.
