Selling your Home - Closing
This blog post is the seventh, and last, in a series on 'Selling your home'. The series will explain, step by step, important considerations and events that will occur if you plan to sell your home in the near future. The first six steps in the series, 'Preparation', 'Marketing', 'Pricing Strategies', 'On the Market', 'An offer. What happens now', and 'After the Offer', can be found on our blog.
In the last few blogs we've talked about all of the steps involved in getting a home onto the market, from preparation, to marketing, to pricing strategies, to what happens when the home comes on the market, accepting an offer on your home, and what occurs between the offer and closing. All of these steps lead to one desired goal. Selling your home. This blog focuses on the activities that occur at closing, or just prior to closing.
Documents/Certificates required at closing
Just prior to closing, various documents have to be obtained from various sources and need to be provided to the closing attorney. The common documents/certificates that are required at closing are outlined below.
For every home that is sold, the closing attorney will require a smoke & carbon monoxide certificate which is issued by the local fire department in your town. Generally the listing agent arranges a time to meet the fire department at the home and the location of the detectors are evaluated, and the operation of the detectors is tested. Only when both location and operation of the detectors is approved by the fire marshal, is the Certificate of Compliance issued. The Certificate of Compliance is valid for 60 days after the inspection by the fire department. If closing is delayed such that the date of the Certificate of Compliance is greater than 60 days, then the home will need to be re-inspected and a new Certificate of Compliance issued. Under certain circumstances a waiver can be issued by the town if the home is to be torn down after closing and a new home constructed on the lot.
At closing, the closing attorney needs to verify that the final water bill for the home has been paid. This is because the water bill 'stays' with the home and doesn't 'follow' the consumer. Several days prior to closing the listing agent will arrange for a final water reading to be done on the home, arrange for the payment of the bill, and provide the paid, receipted final water bill to the closing attorney. If the town provides electricity for its residents, then the final electricity bill needs to follow similar procedures.
Massachusetts law requires that a property that is serviced by a septic system, cesspool or other private waste disposal system be inspected before a home is sold. A Title 5 inspection certificate is valid for 2 years, although under certain circumstances it can be extended to 3 years. These circumstances are if the septic system has been pumped annually since the last Title 5 was issued then the validity is extended to 3 years. If due to weather circumstances, the Title 5 inspection cannot occur before closing, then some mortgage companies will allow an escrow to be held back, from the sellers distribution of funds, that is 1.5 times the cost of replacing the system.
If you're selling a condominium, then Massachusetts General Laws Ch 183, sec 6 (d) requires that the condo trustees sign a certificate verifying the outstanding condo fees assessed against the unit, if any. The 6D certificate name comes from the section of code that determines this requirement. A closing attorney and lender require a 'clean' 6D certificate which states that there are no unpaid fees owed by the seller. The listing agent, or seller, need to obtain this certificate prior to closing.
Just prior to closing, and after you have moved out, the buyers and their agent will perform a walkthrough on your home. The purpose of the walkthrough is to verify the home is as they expect it to be and is in the same condition, given normal wear and tear, as to when they initially made their offer on your home. The only difference to this is where repairs have been performed by the seller as part of the inspection negotiations and agreements. If the seller has agreed to have something repaired or replaced as a result of the inspection, then the buyers will want to verify that these have actually occurred. If the repairs are of a nature that it is difficult for the lay person to identify that they have been done, then the sellers provide a receipt of payment of the repairs to the buyers agent/buyers attorney prior to closing so that the buyers can be assured that the repairs have occurred.
As a seller it is incredibly important to verify what you can move from the home, and what should stay. Review your Offer and Purchase and Sale again, ask the listing agent, and verify what can/can't be removed. Unless you have specifically excluded items, and the contract reflects that these items are excluded, then you may remove them. Some frequent points of contention are washer/dryers, drapes, light fittings and mirrors.
Unless the washer and dryer have been excluded in the contract, then they should remain in the home. I've seen situations where, as a buyers agent, we have done walkthrough of a home to find that the washer and dryer had been removed when they were meant to stay. There is nothing worse as a seller to find that the buyers are protesting that you have incorrectly taken the washer and dryer, and then having to scramble and either return the washer and dryer to the home, prior to closing, or agree to purchase a brand new set for the buyers.
Drapes are often issues also. Unless you exclude the drapes and this is reflected in the Purchase and Sale, then the drapes should stay. Most sellers understand that blinds stay, but are often caught unawares that the drapes should stay also, unless they have been specifically excluded.
If you have sentimentality toward a specific light fitting, then replace it prior to putting your home on the market. But, unequivocally, if you plan to take a light fitting with you when you move then it needs to be excluded before your home goes on the market. The same applies with mirrors on the walls in bathrooms.
Recall that most buyers, at some stage during their time in your home, will have taken photos of the home to get dimensions, wall layouts etc, and when combined with marketing photos can generally identify if something has been removed that should not have been removed. It makes for a very awkward time at/after walkthrough, and creates a lot of distrust between parties, in a very emotional time for all parties, at the best of time. So, if you want to keep something, then remove it, or identify it, prior to your home coming onto the market.
Condition of your home at walkthrough
Ensure that your home is trash free, and nothing has been left behind and you rhome is in 'broom' clean condition. During the buyers walkthrough they expect to find a home that is empty, awaiting their furniture and personal touches. They don't want to find trash/old furniture or anything left behind that had not been previously arranged for it to be left behind. We often hear from sellers that the things that they left are what was left behind when they bought the home. Unfortunately it doesn't matter to the buyer how things happen to be in the home - they don't want them, and expect to have a home free of 'junk'. If you think that the buyer may want some of the things then let your listing agent know and they can check with the buyers agent whether the buyer would like them. If they do find your personal belongings behind then they, more than likely, will contact their attorney and have money 'kept back' from closing ie the funds from closing not completely paid out to you, and money kept in escrow, that will take care of having your belongings removed after closing. If the seller still has to complete finishing touches around the home, say with new construction, then money will be 'held back' from closing to take care of these items. This technique is also used to take care of any items that were agreed to be repaired/replaced as a result of the inspection, and that have not occurred. These funds can be used by the buyer to address the issues if, for whatever reasons, the seller is unable or unwilling to complete them after closing.
Prior to closing you should let the utility companies know that you are moving, and transfer the utilities to your new address. The buyer will be doing the same thing and letting the utility companies know that they will be taking over responsibility for the utilities at this address. If you have an oil tank then you should arrange for the oil company to come and measure how much oil is left in the tank. Your attorney will ensure that you get credited for this amount by the buyers at closing.
Within 3 days of closing, the closing attorney will have completed the closing disclosure which documents the disbursement, prorations, settlement charges and fees that are associated with the sale/purchase of your home. The closing disclosure will detail any adjustments for items paid for by the seller in advance, things like city/town taxes, reductions to the amount paid by the buyers which will be used to pay off mortgages on the home, any reimbursements as a result of the sale, state taxes on the sale, recording fees, attorney fees and the like.
When does the buyer get the keys?
Closing generally takes place at the closing attorney's office, or the Registry's office. Often buyers and sellers, along with their attorney's and agents all attend together, but its not necessary. The sellers part of closing generally only takes 10-15 minutes, and can be done in advance of closing, whereas the buyers are in for the bulk of the time necessary for closing to occur. More often than not, the signing of the mortgage paperwork is what takes the time at a closing.
Its important to note that until the deed/paperwork is recorded at the local Registry of Deeds that the sellers still own the home. This often causes a challenge when closing takes place late in a day, and the paperwork cannot be recorded until the next morning. Most sellers attorney's will advise the sellers not to give the buyers the keys to the home until the home has been recorded at the registry. If its only a matter of an hour or two before recording then that is a different matter to it being an overnight time frame where the buyers have the keys without legally owning the home. For instance, if a moving truck arrives and does damage to the house prior to the paperwork being recorded then it becomes an issue for the seller. From the point of the paperwork being recorded at the Registry, the seller no longer owns the home and should no longer access the home, as it now belongs to the buyers.
If you have any questions about any of this then please don't hesitate to reach out to one of us. We would be more than happy to help.