Mortgage lenders typically require certain tasks be completed before close, such as a home appraisal and a title search which verifies the seller owns the home. Lenders may also require that you purchase homeowners or other types of insurance.
Most homebuyers wish they could close on their home immediately after signing the contract. But on average, it can take 30 to 45 days to complete the closing process for financed purchases.
Once a buyer and seller have finished negotiating a deal, and the transaction documents are finished, they will each sign the purchase agreement. But this does not mean that the deal is closed. Closing is when the actual exchange of money takes place. And the buyer assumes ownership of what they are buying.
In the interim period between signing and closing, the seller will continue to enter into contracts, hire and fire employees, address liabilities and claims as they arise, and otherwise continue operations of the target business.
When you're buying a house, the list of what can go wrong at closing includes everything from issues with the mortgage loan and buyer's credit, insurance snags, appraisal problems, title claims, and events beyond everyone's control (such as natural disasters, or buyer or seller illness or death).
You can expect to wait between 1 day and 2 weeks between exchange and completion. However, in some circumstances, buyers and sellers agree to exchange and complete on the same day or wait longer – sometimes even months. Either way, if you have just exchanged contracts (or about to) on a house sale, congratulations!
Several weeks, or even months, may pass between signing and closing. Practical reasons and/or the complexity of the transaction (e.g. the transaction is not yet wanted, possible or legally permitted) are the reasons for this common divergence in timing.
It can take a couple of months between signing a purchase agreement and reaching closing day. For homebuyers, closing is the day they officially take over ownership of the property and receive the keys.
It is possible that signing day and closing day are the same day, however it is generally a day to 3 days after you signed. Escrow packages all the documents up and sends them over to county to be recorded. This often takes places around 11 or 12 in the afternoon.
During closing, the title company will disburse the funds from your lender to the seller. They'll also record the deed and mortgage or deed of trust with the county. Once everything is signed and payments are made, you'll get the keys to your new property!
Following the exchange of contracts is completion, but there is usually some time for the buyer and seller to make final arrangements. All parties are legally bound following the exchange of contracts. This means that they can face legal consequences if they withdraw from the sale.
You usually cannot cancel a contract, but there are times when you can. You can cancel some contracts within certain time limits. Some contracts must tell you about your right to cancel, how to cancel them, and where to send the cancellation notice.
Key Takeaways:
You won't receive the keys to the home until closing day, which is the last day of the closing process. This is the final day when you and the seller will meet to sign the remaining paperwork. The new deed and mortgage documents will be recorded with the county, making the sale official.
There is no legal time limit for completion to take place. However, it is recommended that completion should occur between 7 and 28 days after the exchange of contracts. This allows both parties to ensure everything is to finalise the transaction.
Some buyers may be able to negotiate an immediate possession date. This means as soon as the transaction is closed and the deed is recorded, the buyer can move in. A few other common buyer possession dates may be 15 days, 30 days, 60 days, or even 90 days after closing, depending on how much time the seller needs.
On closing day, one of the first things you should do is pack for your move, if you haven't already. Depending on how long you've been in your current house and how many possessions you've accumulated, boxing everything up may be a Herculean task.
Granted, unless you are closing after the Register of Deeds has closed for the day, you should realistically get your keys the same day as closing day. However, it may be a couple of hours after you have signed before the Register of Deeds records the Deed giving you possession of the house.
The three-day period is measured by days, not hours. Thus, disclosures must be delivered three days before closing, and not 72 hours prior to closing. Note: If a federal holiday falls in the three-day period, add a day for disclosure delivery.
The Gap between Signing and Closing
This scenario could happen to both parties where they need shareholder approval to buy or sell the company. There are a lot of different types of third-party approval, which vary from deal to deal. One of the most common ones is customer approval.
If the mortgage lender finds some new financial activity in their final credit review, they may ask for an explanation that pushes back the closing date. Title searches can be one of the most intricate parts of preparing for a closing.
While exchange of contracts and completion are both essential milestones in residential transactions, there are some notable differences between the two events: Making the sale legally binding: Exchanging contracts makes the sale legally binding, while completion actually finalises the transfer of ownership.
Completion is when the money changes hands and you are able to finally get hold of the keys to your new place. A time of two weeks is usually allocated between exchanging contracts and completion, although it can be even quicker than this.
Completion Day:
Ideally, all parties in the chain complete around the same time to ensure a smooth transition for everyone.
If either party pulls out of the deal after exchange it is a breach of contract. So, if a buyer pulls out they will lose their deposit which is usually 10% of the sale price. If a seller refuses to proceed after exchange of contracts, they are liable for the buyer's costs including legal, mortgage and survey fees.