Mistakes during real estate closing can make it go dramatically wrong. Although closing is the finish line, there are dozens of obligations and steps to complete before the keys are in your hand.
We’ve seen everything from issues with the mortgage loan to title chains. If you’re looking to buy or sell a property in Florida, we welcome you to contact our Florida real estate closing attorneys so we can guide you through the process, protecting your rights and threat of liability. Remember that a lawyer can solve legal disputes that a real estate agent cannot.
Here’s what can go wrong at real estate closing and what to do if you face the problem:
Top Real Estate Closing Problems
Example 1: You Lost Your Job
If you lose your job during real estate closing, be upfront about it as soon as possible. If you don’t, you could be committing mortgage fraud.
Ideally, you’ll find new employment as soon as possible, which can resolve the situation. However, if you can’t, talk to your mortgage agent and loan officer. They may be able to add a cosigner to your loan.
Example Two: The Closing Disclosure Has a Problem
Three days before closing, you’ll receive your ‘Closing Disclosure’. This document details your mortgage loan, such as your projected monthly payments and expected closing costs.
If you don’t get this, or you notice a problem with it, then you should contact your agent and real estate attorney immediately.
Example Three: The Loan Document Has Inconsistencies
You’d be surprised how many loan documents have incorrect names or misspelled names. These rather minor problems can actually cause delays and significant disruption to closing.
So make sure you analyze the loan document carefully in advance. If you notice any errors, resolve them immediately.
Example Four: You Can’t Afford Closing Costs
The closing cost list is extensive. Many people underestimate it. If you don’t have the budget to pay for these, the closing process can come to a grinding halt. The lender will review these costs when you apply for the loan and will also explain that you must have a reserve built up. They will verify these funds, so make sure you save them and don’t spend them in other places.
To avoid any delays, create a cushion in your budget for any surprise closing costs.
Example Five: Wire Fraud
Wire fraud isn’t common, but if it does arise, it’s like throwing a grenade into your hopes and dreams.
Mortgage wire fraud can occur when scammers pretend to be the closing attorney or title company and ask for payments. Always be sure to verify any payment instructions. Never use a phone number or website listed within an email; only contact your closing attorney or title company using the information you have previously trusted or that is found on their website.
Example Six: You Forgot Your Documents
One of the more embarrassing mistakes is to simply forget your documents! That includes:
- Identification Documents
- Certified funds or proof of wire transfer
- Proof of homeowner’s insurance
- A copy of your contract
- Any other documents that the lender has requested.
Remember to check your ID hasn’t expired, in advance!
Example Seven: There are Liens on the Property Title
If liens are revealed to be present on the property, then the closing can be delayed significantly or even end entirely. This is one of the most common ways real estate closing can go wrong.
To avoid this, you need to perform a title search, ensuring there are no outstanding liens or debts on the property. Both buyers and sellers should do this. Ask your real estate lawyer for more information.
Example Eight: The Seller Doesn’t Have the Right to Sell
There are instances where two parties meet for the closing, and the seller doesn’t have the right to sell the property. Whether it’s due to fraud, forgery, missing heirs or any other reason, it can be a horrific shock.
You can avoid this by doing your due diligence in advance. Title searches can reveal claims to the property, avoiding nasty surprises upon closing.
Example Nine: The Final Walkthrough
The final walkthrough is the buyer’s last chance to inspect the property before closing. If, during that walk, the property isn’t in the condition they were promised, then closing will be delayed.
For example, if a seller hasn’t repaired something they were under contract to fix, or they have or haven’t removed items they needed to.
If that happens, the buyer should immediately contact their real estate lawyer to resolve the issue. A fair cost should usually be negotiated to cover the issue – such as the seller agreeing to cover the expenses at the closing.
Ideally, to allow for small hiccups, you will complete a preliminary walkthrough several days in advance of closing and then do a final walkthrough right before closing.
Example Ten: The Buyer or Seller Passes Away
If one party passes away just before closing, then you’ll enter all sorts of legal confusion. However, if you write this possibility into the contract, you can minimize the complications. For example, you could say that any contractual obligation passes to the heirs.
To include contingencies such as these, contact a Florida real estate lawyer who can draft a water-tight contract on your behalf.
Example Eleven: Someone Gets Sick
Ever since COVID-19, it’s not been unusual to see a buyer or seller too sick to attend the closing. Depending on the severity of their illness, this could be a minor or major issue.
However, you may be able to do a virtual walkthrough or close through a power of attorney.
Example Twelve: Someone Backs Out of the Deal
Sometimes people may get cold feet and try to back out. Most real estate contracts protect the seller by making the buyer forfeit their earnest money.
In some cases, the seller may even be able to sue the potential buyer to make them buy the property. However, this is rare.
If the seller defaults at closing, the buyer can get their earnest money back and request the seller pay them the same fee as their earnest money. However, in some cases, you may also be able to sue for specific performance.
If this happens to you, contact our Florida real estate attorneys as soon as possible.
Example Thirteen: A Natural Disaster Occurs
Florida is no stranger to hurricanes. If a natural disaster such as a hurricane hits during or just before closing, then it’s usually down to the buyer to decide whether they want to proceed with the sale or not. That’s because almost all contracts have a natural disaster property damage clause. Other factors including insurance proceeds and mortgage loan company policies will also play into the decision.
Example Fourteen: There’s an Insurance Issue
By having your insurance sorted out early in the process, you can avoid nasty surprises. Most real estate lawyers will advise you to have to get an insurance quote as soon as you have a contract on a house. Many mortgage companies now require them near the time of application as well.
Once you’ve got a contract, call for property insurance and flood risk inspection.
Example Fifteen: Your Credit Has Plummeted Since You Applied for a Loan
Around closing, you need to ensure your credit is still in good shape. Avoid making other big purchases or applying for other loans until closing is complete. If you do, it could have a big impact on your credit history or cause your debt to income ratio to exceed loan guidelines. Lenders will redo their credit check just before closing, so respect that credit!
Read Related: What Happens at a Real Estate Closing?
Contact a Real Estate Closing Lawyer in Florida
If you’re buying a property in Florida and need assistance with the closing process or any real estate closing problems, our Florida real estate attorneys can help.
We’ll guide you through the process, ensuring your rights are protected. We can also coordinate, prepare and complete documents related to the title, deed, transfer, and loan acquisition.
If you’re purchasing property or land in St Petersburg, Florida or Riverview, Florida, contact us today.
Our St Petersburg & Riverview real estate attorneys have extensive experience that can help you through these tricky moments, reviewing your contract, advising you on the next steps to secure your transaction, and successfully finalizing the purchase of your new home or commercial property.
Contact us today to schedule a free consultation.