Closing: Understanding your Legal Buyer Obligations

After weeks or months of viewing and bidding on properties, your offer on the house of your dreams has been accepted. Now what? At this point, typically, there is a bit of a waiting period. The closing date in real estate is defined as the day the buyer officially becomes the owner of a property after all the legal and financial aspects of the transaction are complete. The closing date is when the buyer becomes the legal owner of a property. Closing periods – the time it takes to complete the closing tasks – can take several weeks to a few months, but some essential buyer obligations must happen quickly.

How Long Does It Take to Close on a House?

The buyer and seller typically agree on the closing date in real estate when the Agreement for Purchase and Sale (a legally-binding contract) is signed. The contract often sets the closing date at 30 to 60 days after the agreement, but the buyer and seller may stipulate that the closing date can be changed or extended if both parties agree.

If there were any conditions within the offer, there’s a period during which the buyer/or seller must take all the necessary steps to fulfill them. This may include the buyer securing mortgage financing, hiring a professional to conduct a home inspection of the property – and everything else that needs to happen before you officially seal the deal – which could even include the buyer selling their old residence or the seller closing on a new one.

Realistically, how long does it take to close on a house? The simple answer is it depends. There are many reasons that a closing date might need to be extended. Here are just a few:

Problems with the Appraisal of the Property

Since a buyer will not be able to borrow more than a certain percentage of the value of the house, if the bank appraises the house at just $500,000 and you offered $750,000, you’d be required to come up with the additional $250,000. If you still want the house, while you scramble to come up with the cash, you might need to extend your closing.

Problems with the Documentation Required for Mortgage Approval

Copious amounts of paperwork are involved in each mortgage approval. A delay in submitting any of the documentation demanded by the bank could delay your closing date.

Discrepancies in the Property Survey
The real estate closing must be based on clear, accurate information to be binding, so the survey must accurately represent the current state of the property. If you were erroneously awarded ownership of your neighbour’s fence, it could turn into a future legal battle, and nobody wants that.

Issues with the Property Title Search
The title to the property must be completely owned by the seller with no other party able to claim ownership. A title search is also done to ensure there are no liens or other potential claims on the property before it’s deeded to a new owner. The search and verification process could be extensive if the title was not updated in recent years.

What to Do During the Home Inspection

Your building inspector will discuss their overall approach and how their findings will be shared with you. Your real estate agent will be able to advise you as to the most likely strategy to be taken by building inspectors in your area.

If permitted, consider accompanying the inspector throughout the home inspection process, which usually takes about three hours. This will allow you to learn as much as possible about the various home systems: heating, plumbing, electrical, and roofing. The home inspection may also identify some repairs that need to be made so that you have a better idea of the home’s condition before proceeding with the deal.

At the end of the conditional period – with any adjustments or repairs made to your satisfaction – your real estate agent will finalize the deal, and your lawyer will process the paperwork, including the mortgage documents, with your lender. All of this will point to a final date of actual legal possession: The real closing date in real estate.

What Happens Leading Up to Closing Day

As a buyer, it is essential to understand your legal obligations at closing to ensure a smooth and successful transaction. The following things will happen leading up to the date of closing:

The transactions will be processed through your lawyer and bank on the possession date. Once they are complete, you can get your keys and start moving in!

Post-Closing Obligations

The work doesn’t stop once the closing date has passed.

There are several post-closing obligations that buyers must meet to ensure a smooth transition and avoid potential legal issues, including:

In addition to the critical post-closing obligations, there may be other tasks that the buyer needs to complete depending on their specific circumstances. For example, if the property is part of a homeowners association (HOA) or condo association, the buyer may need to pay condo fees and follow additional rules or regulations.

Failing to meet post-closing obligations can result in legal issues, financial penalties, or property loss. Seeking professional help from a real estate attorney or agent can help ensure that all post-closing obligations are met and that the transition to homeownership is smooth and successful.

Still Have Closing Questions?

Understanding your legal obligations as a buyer upon closing is a crucial part of the home-buying process. Hopefully, you feel more informed about the closing date in real estate and the closing date vs move in date.

If you still have questions – and even if you don’t – remember to seek professional help from a real estate attorney or RE/MAX agent to ensure all your closing obligations are met and the home purchase goes smoothly. Before long, you’ll be settled in the new place you call home.

Connect with a RE/MAX agent and see the difference that adding an experienced real estate professional to your closing team can make.