What Happens at a Real Estate Closing?
At closing, the buyer, seller, lender and settlement agent finalize the sale. Before closing, the buyer gets a Closing Disclosure at least three business days in advance and does a final walkthrough. At the table, the buyer signs the promissory note, mortgage or deed of trust and other loan documents, the seller signs the deed, funds are transferred, and the deed is recorded. Beware of wire fraud.
Closing (also called settlement) is when ownership transfers and the loan funds. Most of the work happens in the weeks before.
Before closing
- Title search and title insurance: the title company checks for liens and ownership problems. See clouds on title.
- Appraisal and loan approval.
- Homeowners insurance in place.
- Closing Disclosure: for most mortgages, the lender must deliver this form at least three business days before consummation, showing the loan terms and costs (12 CFR 1026.19(f)). Compare it with your Loan Estimate and ask about changes.
- Final walkthrough: confirm agreed repairs were made and the home is in the expected condition.
At the closing
Buyers typically sign:
- Promissory note (the promise to repay)
- Mortgage or deed of trust (the lien on the home)
- Closing Disclosure and other lender forms
- Affidavits and tax forms
Sellers sign the deed transferring ownership and documents about payoff of their loan. In some states closings happen in escrow without everyone meeting at a table; in others, an attorney must conduct the closing.
Money
The buyer brings the down payment and closing costs, usually by wire transfer or cashier's check. Closing costs can include lender fees, title insurance, recording fees, transfer taxes, prepaid interest, and escrow deposits for taxes and insurance.
Wire fraud warning
Criminals send fake wiring instructions that look like they come from the title company or agent. Always confirm wiring instructions by calling a known phone number, not one in the email, before sending money (CFPB).
After closing
- The deed and mortgage are recorded with the county.
- The buyer gets the keys, according to the contract's possession date.
- The seller's loan is paid off.
- Keep all closing documents permanently.
Common closing problems
Last-minute title issues, appraisal shortfalls, financing delays, repair disputes, or HOA estoppel issues. A real estate lawyer can review documents and resolve problems before you sign. See also quitclaim deeds for transfers between family members.
Sources
Find real estate lawyers near you
Buying or selling a home, closing on a property, or dealing with a landlord-tenant or title dispute? Compare local real estate attorneys by Google rating, reviews and office hours below.
Real Estate Lawyers by state
Tap your state to see listings by city.
This article is general legal information, not legal advice, and reading it does not create an attorney-client relationship. Laws differ by state and change over time; talk to a licensed attorney in your state about your situation.