How to avoid closing-day glitches
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.
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."
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."
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."
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."