SETTLEMENT & TITLE INSURANCE
Settlement, also called closing, is the final step in a real
estate transaction. The settlement date, usually negotia-
ted and agreed upon during the offer negotiation,
typically occurs 30 to 60 days from the date of contract
ratification, although there is wide latitude for this.
Settlement in our region is typically coordinated by a law
firm, although that may not be necessary depending on
the jurisdiction. At closing, ownership of the property is
transferred from seller to buyer.
Most purchasers receive some amount of financing, and in those cases lenders are deeply involved in the closing process. Lenders usually require the purchase of such things as a title search, title insurance, homeowners insurance, an appraisal, and a house-location survey. The fees for these and other transaction-related services are called "closing costs", and are typically paid at closing.
On the day of closing, the buyers deliver to the closing company the funds they owe for their down payment and closing costs, minus their earnest money deposit (usually already delivered for escrow at the time of contract ratification.) The lender delivers to the closing company the remainder of the purchase amount, representing the buyers’ new mortgage.
Using the funds received from the buyers and the lender, the closing company then pays taxes, balance on the sellers’ mortgage, and other 3rd party fees related to the transaction. The remainder of the funds are, finally, given to the sellers, who then give the buyers the keys to their new home.
This is, of course, a simple explanation of what transpires during a real estate settlement. For more detailed information, please refer to the following sources: