New Visitors Privacy Policy Sponsorship Contact Us Media
Baby Boomers Family Green Home and Auto In Critical Condition Just Starting Out Lifestyle Money
- advertisement -
Bankrate.com
News & Advice Compare Rates Calculators
Rate Alerts  |  Glossary  |  Help
Mortgage Home
Equity
Auto CDs &
Investments
Retirement Checking &
Savings
Credit
Cards
Debt
Management
College
Finance
Taxes Personal
Finance

 

How to avoid closing-day glitches

Page | 1 | 2 | 3 |

When remodeling work is done on a house to get it ready for sale, the seller still has to pay the contractor. If the roofer or carpenter gets stiffed, they could put a mechanic's lien on the house -- and they don't have to do it right away. "Under a state's mechanic's lien statute, a contractor who completes the work has a period of time after completion to file a lien if they haven't been paid. The time frame varies by state and also by trade," says Weinberger. So even though the title could have been searched well before closing, a lien could be placed on the home right before closing -- or even after.

- advertisement -

According to Weinberger, the way to prevent this problem is to ask the seller to verify that any repair projects have been paid. "There needs to be an affidavit signed by the seller at closing in which the seller swears that there was no work performed prior to closing for which the seller didn't pay."

6. Buyer's remorse
A buyer who is having second thoughts about their impending purchase may be tempted to use one of the above points to kill the deal, even if it means walking away from the earnest money paid to make an offer on the house. However, doing so could mean big penalties for the buyer. 

7 closing-day glitches

"There's an implied obligation of good faith and fair dealing in all contracts. If the buyer is using the walk-through, for example, as an escape hatch to walk away from the contract, they are playing with fire," says Weinberger. The seller could sue the buyer for breach of contract. "Courts see that for what it is and they're unsympathetic to buyers."

7. Closing confusion
Even if all parties fully intend to close on the contract, mistakes can still happen that could cause a delay. "My first year as a real estate agent, a closing was postponed because the attorney neglected to get a 'plat of survey' completed," says Rhodes. A plat of survey is a drawing of the property that shows all legal boundaries. "The closing was originally on a Friday, but it had to be rescheduled for the following Monday so the attorney could bring in the document."

A routine examination can also cause last-minute problems. "When we were selling our house a few years ago, one of the last things that happened before closing was the gas company came out and conducted an inspection," says Weinberger. "The gas company determined that our stove wasn't connected properly, and we were surprised to see them unhook it then and there. Fortunately, the new owners were preparing to totally remodel the kitchen and replace all appliances, so they didn't need the gas connection. But for those last few days when we were in the house, we had to live on microwave food."

Though closing-day glitches do happen, they can still be overcome. Don't panic, says Weinberger. "Most closings go through smoothly."

Bankrate.com's corrections policy-- Posted: July 12, 2007
 
 
Create a news alert for "mortgage"
Page | 1 | 2 | 3 |
 
 RESOURCES
Understanding the closing process
Understanding escrow accounts
Timeline for buying a house
 TOP MORTGAGE STORIES
How to lower your property taxes
Forged signature puts kibosh on home sale
Will mortgage assumption solve crisis?
 

Mortgages
Compare today's rates
NATIONAL OVERNIGHT AVERAGES
30 yr fixed mtg 4.32%
15 yr fixed mtg 3.36%
5/1 ARM 3.37%
Rates may include points
RELATED CALCULATORS
  Calculate your monthly payment  
  How much house can you afford?  
  Fixed or adjustable rate: Which is right for you?  
VIEW ALL  
FINANCIAL LITERACY
Rev up your portfolio
with these tips and tricks.
- advertisement -
- advertisement -

About Bankrate | Privacy Policy/Your California Privacy Rights | Online Media Kit | Partnerships | Investor Relations | Press Room | Contact Us | Sitemap
NYSE: RATE | RSS Feeds |

* Mortgage rate may include points. See rate tables for details. Click here.
* To see the definition of overnight averages click here.

Bankrate.com ®, Copyright © 2014 Bankrate, Inc., All Rights Reserved, Terms of Use.