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Real Estate Law, 8th Ed.

by Marianne M. Jennings

Chapter 16

Closing the Deal

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Requirements for Escrow Instructions

1. Name of the agent, third party, or depository

2. Names of the buyer (buyers) and seller (sellers) and their proper designation (partnership, corporation, married couple, single person, and so on)

3. Legal description of the property to be transferred

(Continued on next slide)

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Requirements for Escrow Instructions

4. Purchase price of the property

5. Conditions of transfer and payment

6. Allocation of expenses, costs, insurance, taxes, assessments, and so on

7. Signatures of the buyer and seller

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Fees in Escrow

1. Escrow fee

2. Fees for title search, title abstract, title insurance, and attorneys’ work associated with such

3. Recording fees for the deed, mortgage, deed of trust, and any other documents required

4. Mortgage transfer or release fees(Continued on next slide)

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Fees in Escrow

5. Loan origination fees

6. Termite inspection report

7. Appraisal or survey fees

8. Credit report fees

9. Loan discount points

10. Other attorneys’ fees such as for drafting documents

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Requirements for Closing

Underlying purchase contractDeposit of deed with agentValid escrow instructions

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Closing Costs

1. Escrow fee

2. Fees for title search, title abstract, title insurance, and attorneys’ work associated with such

3. Recording fees for the deed, mortgage, deed of trust, and any other documents required

4. Mortgage transfer or release fees(Continued on next slide)

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Closing Costs

5. Loan origination fees

6. Termite inspection report

7. Appraisal or survey fees

8. Credit report fees

9. Loan discount points

10. Other attorneys’ fees such as for drafting documents

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Delivery Requirements by Seller for Closing

1. Title documents: abstract, opinion, and insurance

2. Most recent tax bill

3. Insurance policies

4. Plans and specifications for original construction and modifications

5. Warranties on any appliances, heating systems, and so on

(Continued on next slide)

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Delivery Requirements by Seller for Closing

6. Uniform Commercial Code (UCC) bulk sale affidavit for business transfer (where applicable—Article 6 on Bulk Sales has been repealed in some states)

7. Soil, termite, and other property condition reports, including reports from environmental agencies

8. Keys9. Notes, mortgages, deeds of trust, UCC

Article 9 security agreements and financing statements

10. List of tenants and copies of leases11. Building code inspection and compliance

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Delivery Requirements for Escrow for Buyer

1. Earnest money check

2. Loan commitment

3. List of defects to be remedied prior to closing

4. Corporate authorization if corporate buyer is involved

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Delivery Requirements for Lender for Escrow

1. Mortgage, deed of trust, and promissory note

2. Truth-in-lending statement (see Chapter 15)3. Real Estate Settlement Procedures Act

(RESPA) statement (see later for discussion)

4. Required forms if Federal Housing Administration (FHA) or Veterans Administration (VA) loan is availed

5. Required inspections if FHA or VA loan is involved

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Requirements for Escrow Instructions

1. Name of the agent, third party, or depository2. Names of the buyer (buyers) and seller (sellers)

and their proper designation (partnership, corporation, married couple, single person, and so on)

3. Legal description of the property to be transferred

4. Purchase price of the property5. Conditions of transfer and payment6. Allocation of expenses, costs, insurance,

taxes, assessments, and so on7. Signatures of the buyer and seller

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Purposes of RESPA

1. To provide more effective advance disclosure to home buyers and home sellers of settlement costs.

2. To eliminate kickback or referral fees that tend to increase the costs of settlement services.

3. To reduce the amounts buyers are required to pay into escrow for taxes and insurance.

4. To reform local record keeping and land title information.