Real Estate Transaction Checklist
Buying and selling real estate can be a complicated transaction. That is why you need an attorney who has experience in closing these transactions on a daily basis to guide you throughout the many steps that need to occur before title can be transferred to the buyer. The Closing is the successful end of a lengthy and complicated process that involves the coordination of multiple parties and the drafting of many documents. The following is a checklist of most steps and documents needed to successfully complete a real estate transaction. Please contact our attorney regarding your specific transaction’s needs.
- Engagement Letter/Retainer Agreement. (Buyer and Seller) This letter will detail the scope of the agreement, its terms, and costs. The purpose of this letter is to set expectations on both sides of the agreement.
- Real Estate Purchase Contract. (Buyer and Seller)– Negotiate a contract between buyer and seller. It is important that an attorney review this agreement during the attorney review period provided for in the contract to flesh out the parties’ understanding about certain aspects including the inspection, financing, contingencies, time frames, etc.
- Earnest Money Receipt. (Seller’s agent) This is given to a buyer of real estate after entering into a purchase agreement with a seller. The deposit slip is given to the buyer after funds have been received which binds the parties into the agreement.
- Obtain Home Inspection (Buyer)– we recommend that all buyers obtain a Professional home inspection to ascertain the true condition of the home including any hidden or latent defects or issues not previously disclosed. The Seller will have disclosed Lead Based paint disclosure, Disclosure of Radon Hazards, Disclosure of Hazardous Mold and the Illinois Residential Real Property Disclosure Report. Any discovered issues are ripe for your attorney to negotiate with the seller whether through repairs, credits or other adjustments.
- Appraisal – (Buyer) Determines the value of the property and is ordered by the buyer and his/her lender to determine the amount the lender will finance.
- Loan Approval – (Buyer) The Buyer must obtain loan final approval if a loan is needed. This is a very comprehensive and potentially lengthy process.
- Deed. (Seller) Seller’s attorney will prepare the Deed whether it be a Warranty Deed, Trustee Deed, Administrator Deed, Deed of Trust, etc. The Deed is the document which describes the property, names the parties, is signed by the seller(s), is recorded in the Public records and transfers legal ownership of the property.
- Association Paid Assessment Letter. (Seller) We will request a Paid Assessment letter from your HOA.
- Affidavit of Title. (Seller) A statement certifying that the seller is the true and lawful owner of the property, that there are no liens against the property, and there are no other matters that would adversely affect title to the property.
- ALTA Form. (Seller) – Seller promises the title company that there are no liens against the property that are not recorded or have been attached since the last recording and are not recorded yet.
- Bill of Sale. (Seller) The bill of sale denotes any and all of the personal property that you are leaving to the next owner. Everything that you and the buyer agreed to transfer over goes on this document.
- Certificate/Proof of Insurance. Seller should provide proof of homeowner’s insurance and request a pro-rata refund of your insurance premium. As a note, you should keep the coverage in place 48 hours after closing. Buyers must provide proof of insurance to their Lender prior to closing.
- City/Municipal Stamps (Seller usually) – Many cities or municipalities require an additional real estate transfer tax and corresponding stamps that much be purchased when paying the tax and affixed to the deed prior to recording. It is usually customary for the seller to pay although some states and counties levy a stamp tax on both parties.
- Commission Statement. (Seller) Submit commission agreement/instruction to closing attorney in advance of closing whenever possible.
- Condominium 22.1 Letter. (Seller) Broadly speaking 22.1 refers to the State of Illinois’ statute on disclosures for condominiums being sold by any owner other than the developer. Put simply, this is the condominium document and information that a condo association or management company must present to a potential purchaser. If your closing requires a Condo Questionnaire or 22.1, we will request it.
- Payoff Letter. (Seller) Provide your mortgage and loan payoff information for both your 1st mortgage, 2nd mortgage and home equity loan (if applicable).
- Payoff Letter – Credit Cards. (Seller) Provide credit card loan payoff information for credit cards or any other unsecured debts (if applicable).
- Power of Attorney. (Seller) Consider using a power of Attorney (POA) if your attendance at the closing will compromise your moving plans or if you will be out of town. A POA allows your spouse or you lawyer to sign the closing documents in your absence.
- Releases –(Seller) Attorney will obtain all releases required to clear title.
- Search Package (Seller) – Seller’s attorney Title company will prepare a search package which is a compilation of all recorded documents in the public domain referring to, attached to or regarding your parcel of real estate.
- Settlement Statement (Seller) – Seller’s attorney will prepare an itemized list of all the fees or charges that the buyer and seller will pay during a real estate transaction. Contact your attorney regarding how the funds should be brought to the closing (i.e. wired prior to closing, paid by cashier’s, etc.).
- Survey. The seller of a residential real estate provides a professional Survey of the property. This document details how much land is owned and whether there are buildings (a home or commercial structure), easements or encroachments. We will supply a list of surveyors if needed.
- Taxes. – Taxes are prorated at closing and reflected in the Settlement statement. Make sure you understand the how and when the taxes get paid and how to get the exemptions (homeowner and senior citizen) you are entitled to.
- Termite. You should provide the termite inspection report to the buyer’s agent and lender.
- Title Commitment – (Seller) – This is a commitment from the title company that they will ensure the tile if all of their conditions are met.
- Transfer Declaration(s) – (Seller) – City, County and State Declarations are required.
- Water Meter. You should request a final water reading as of the day of closing. If your water meter is inside, call the water company to arrange a convenient time for them to come inside and read the mater.
- Zoning Certification- (Buyer or Seller) may be required for new construction or certain properties to show that the property is zoned for its intended use.
- Loan documentation – (Buyer) – all final loan documents must be reviewed and executed including the mortgage, note and mortgage disclosures.
- Estoppel Letters – (Seller) In condominium or commercial transactions or any property with a homeowner’s association where fees are paid, or a tenant in a commercial transaction it is necessary to obtain an estoppel letter that explains what fees, rents or expenses are owed by the previous owner at closing so that the new owner is not liable.
Buyers/Sellers Bring to Closing
- Bring Photo I.D. It is important to bring photo identification to the closing
- Transfer Keys. Once the documents are signed and the money transferred, the keys need to be turned over as well, along with any garage openers.
- Transfer Funds. The agreement isn’t final until the money is transferred.
Every real estate transaction is different, and steps will vary with each unique situation. Since real estate transactions are very complex, you should consult with an attorney. Contact us today by calling (708) 928-6392 to speak with an experienced real estate lawyer regarding your own personal situation.
Material presented on the Law Office of Candace Tyndall website is intended for informational purposes only. It should not be construed as legal advice or the formation of an attorney-client relationship.