Closings can be confusing if you don’t know what to expect. Here’s what every homebuyer needs to know.
Why do I need a closing attorney?
In the state of Georgia, a real estate closing must be conducted by an attorney.* When a new loan is involved the closing attorney represents the lender in the transaction, and the goal of all parties is to complete the closing accurately and according to the contract. For this reason, the closing attorney representing the lender is almost always the only attorney present at closing. The closing attorney conducts the closing of the sale (or refinance). To do so he must gather information about the contract, the loan, title to the home, homeowners insurance, home warranties, termite inspections, land surveys and prepare documents that cover those matters. Then he must supervise the closing, including collecting and distributing funds and providing title insurance for the lender and buyer. Every closing is different and therefore the closing attorney must be organized and flexible.
Who schedules my closing?
Most of the time your mortgage or real estate agent will contact our office to schedule your closing. When you are notified, you should make sure that the time requested will work with your schedule so that you can attend.
Who needs to attend the closing?
Anyone whose name appears on the loan or the title to the property must be present at closing or be represented by a power of attorney approved by us and your lender. Also, if a spouse or other person is to be on the deed (even if they are not on the loan) they must attend closing.
Who conducts the title exam on the property?
An experienced title examiner, who is an employee of Dover Miller Karras Langdale & Brantley, will thoroughly examine the court deed records related to your property for potential title issues and tax information on behalf of the lender. The closing attorney will review this title work and be responsible to the lender, or you, as purchaser, in a cash transaction. Our office will also order a survey, should one be requested by you or your mortgage company or bank.
What is title insurance and do I need it?
There are two types of title insurance: owner’s and lender’s. The lender’s policy is included in your closing costs, but this policy does not protect the buyer in any way. At Dover Miller Karras Langdale & Brantley, we recommend that all new homebuyers purchase an owner’s title insurance policy at closing. This policy will protect your interest in the property against any claims or defects which are discovered after the closing. Examples include: contractor liens, federal tax liens, unrecorded or misrecorded documents, boundary disputes or claims/liens filed after the effective date of the title exam. Title insurance will also protect you should your title turn out to be fraudulent or forged. Title insurance is a one-time fee and is a relatively inexpensive way to ensure that your equity is protected. In Georgia, the only way to obtain a title insurance policy is through a closing attorney.
The need for owner’s or purchaser’s title insurance has in 2014 increased because the new standard GAR real estate contracts no longer require the seller to give a full warranty deed. Title is typically conveyed by a “limited” warranty deed which provides a warranty only for anything that happened to the title during the time the seller owned the property. Traditionally each seller gave a full warranty deed which covered all title matters back through the chain of title. Because there was a warranty in each step back, any prior owner could be held liable for a title defect occurring during his ownership and any time prior. With the current seller only giving a limited warranty, you would be precluded from making claims on prior owners because the connection in the chain of warranties is broken.
Since the closing attorney is required to represent your lender, and you no longer can go against prior owners for title defects, the purchaser of a defective title is often left with no recourse against any of the parties. This makes a strong argument for you to purchase your own title coverage.
Please call our office to get a quote so you will know the exact premium. This is paid only once at the time of closing and will stay in effect for as long as you own the property. For more information about covered matters and title insurance in general, please visit Chicago Title’s website.
Who pays attorneys’ fees?
Attorneys’ fees for the representation of the lender are included in the closing costs and do not need to be paid separately by the buyer or seller. Attorneys’ fees are paid at the time of closing according to the terms of the contract between buyer and seller.
How much money should I bring to Closing?
You should bring the amount shown on the preliminary HUD-1 Settlement Statement, or as otherwise instructed by our office.
Are personal checks acceptable to cover Closing costs and down payment?
Georgia law (O.C.G.A Section 44-14-13, the “Good Funds” law) requires that all funds received by the closing attorney in excess of $5,000 must be in the form of a wire. For amounts in between $1,000 and $5,000, a certified check issued by a local bank will be accepted. Personal checks on a local bank will be accepted for less than $1,000. If you have any questions regarding these requirements, please contact our office so as to avoid any delay in the disbursement at your closing. If you need to transmit funds by wire, please contact us for wiring instructions. If you are arranging funds prior to our preparation of the Settlement Statement, we recommend discussing the estimated amount due at closing with your lender, then wiring that amount to us. Certified checks, if applicable, should be payable either to Dover Miller Karras Langdale & Brantley or to your own name and then endorsed to us at closing.
What is Homestead Exemption and how do I file for it?
Residents (those who pay Georgia income tax) in the state of Georgia are permitted to file for a homestead exemption for their primary residence. Homestead Exemption is a partial exemption from property taxes and results in a reduction in the property taxes assessed against that property. To be eligible for Homestead Exemption in a given year, the owner must have owned and occupied that property on January 1 of that same year. You may file for Homestead Exemption any time after the closing date up until March 1st of the following year. To file for Homestead Exemption, you must take a copy of your settlement statement and/or your deed to the Tax Commissioner’s Office in the county in which your primary residence is located. Also, homeowners over 65 years of age may claim an additional exemption. In Lowndes County, the Tax Commissioner’s office is located at 300 North Patterson Street, downtown across from the old courthouse.
What if one party can’t be at the closing?
Any party who cannot be at the closing must send a representative with power of attorney to execute the closing documents in his or her place. Any power of attorney which will be used at the time of closing must either be prepared by Dover Miller Karras Langdale & Brantley, or reviewed by us prior to the closing. If you know you cannot be at your closing, we can assist you with preparing a power of attorney for someone to sign in your place. If a power of attorney is used that has not been recorded in the public records, you must bring the original to closing. If you are representing a trust, an estate, or business entity, you must present to us documentation of your authority to sign for that trust, estate or business entity prior to closing. Your documents will need to be prepared differently if you need to use a power of attorney so we need to know as far in advance of closing as possible.
Can I handle my estate planning with my closing?
Yes. Buyers or sellers can set aside time before or after their closing to discuss estate planning matters or, if planned in advance, to execute wills, durable general powers of attorney, Georgia Advance Directives for Healthcare, or other estate planning documents.
*Formal Advisory Opinion No. 86-5; Formal Advisory Opinion No. 00-3; Formal Advisory Opinion No. 13-1; UPL Advisory Opinion No. 2003-2. See also 277 Ga. 472 (2003) and 295 Ga. 749 (2014).