Closing on land can be a stressful time for buyers and sellers, but as Pat Porter covers in his latest video, there are things that can be be done to reduce stress, insure accuracy and prevent problems that would have to be fixed later. A closing should be showing up to do what you know is already done- with no surprises! As the owner and broker at RecLand Realty, Pat has learned from years of experience to ask for a copy of the closing documents in advance of the final draft being sent to all parties for signature. In his latest video, Pat talks about the full set of closing documents on an 80 acre tract of land for sale. RecLand Realty is representing the seller in the transaction.
Pat reviews the set of documents to make sure there are no issues and to prepare himself in case either party has questions at the closing table. In this case, Pat did not receive the documents as early as he had hoped- it’s Saturday and the closing is scheduled for the following Monday. If you’re being represented by a real estate agent in a transaction, Pat recommends asking your agent to review a copy before the final documents are drafted.
Upon review, Pat is able catch several issues that could have been handled earlier, had the title company sent the paperwork for review just a few days in advance of the closing date. Closing documents should not include:
- Unknown numbers
- Unusual circumstances
- Anything that you have not been made aware of prior to the closing date
Most title companies do great work, but on this tract there were a few mess ups. Here are a few items Pat caught on a quick review of the documents:
Settlement statement: $4,000 survey, to be paid for at closing by the seller, was conducted but not reflected on the settlement statement.
Buyer overcharged: This is a price per acre deal, and the settlement statement reflects 80 acres (at the agreed upon per acre price) equaling a flat amount. The contract specifically indicates a purchase price per surveyed acre. The survey came back four tenths (0.4) of an acre less than 80, or 79.6 acres. The title company failed to adjust the purchase price by that 0.4 of an acre. The purchase price had to match the surveyed acres. The amount per acre, times 0.4, is real money. Even though the buyer had reviewed the documents and was satisfied with the price, Pat’s observation kept the buyer from being shortchanged in this transaction.
Irrelevant parcel: The title company included a parcel in the deed, as well as on all the other documents, that is NOT part of the deal. The parcel doesn’t belong to the sellers; it actually belongs to the buyer. For whatever reason, it showed up in the documents, but should not be included. The property is not involved in the transaction in any shape, matter or form.
Pat brings these three major mistakes to their attention, and the title company is able to quickly make the changes. It worked out in the end, but still cost time- and time is a big deal in real estate closings! When you get right down to the time of closing, everything need to be right.
There are several things that Pat DOES NOT look for in the closing documents, such as every “call” in the survey. Simply put, “calls” are the stated direction and distances on the plat- and there can be dozens in a legal description. If the title company messed that up somehow, like transposed some numbers or got the wrong numbers in there, those corrections can be made later by the title company. They reserve the right to make a “notarial act of correction”, and most of the time they are fixed and people don’t even know about it.
Some corrections are known as “material changes” in the documents, and those require the parties to come back together and re-sign new documents and have things notarized all over again. Sometimes it occurs years later, and they have to track down the parties. Those types of changes are a nuisance for everyone involved, and over the years Pat has dealt with them as a buyer, a seller, and a real estate salesperson trying to put the pieces together from a land deal years ago. It all gets taken care of, but it’s a huge waste of time.
All of these hiccups can be avoided by reviewing an advance copy of the settlement statement, making sure the big numbers are right and both parties are being charged accordingly based on what the contract states. Pat always double-checks the legal description to make sure that it is the tract being represented in the sale and to make sure the legal description on the deed is the same as what’s on the title policy.
These are a few examples of big items that your real estate agent, or yourself, can check. Kindly ask the title company or attorney’s office (some states require the use of an attorney) for an early draft and have someone knowledgeable review your documents in advance. This way, when you arrive the day of closing, you’re signing what you know.
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