In this article, we explain how to prepare for a real estate closing in Illinois. In a previous article, we discussed the first stage of a real estate sale, Attorney Review and Modification of the Contract. Now we will provide a checklist of tasks that the seller (or the seller's attorney) must handle between the execution of the contract and the closing date.
Immediately upon execution of the real estate contract, the seller must execute and provide to the buyer certain disclosures regarding the seller's knowledge of potential hazardous conditions in the home. These include:
The seller's attorney will work with a title company to order a title commitment and clear up any issues with the seller's title to the property. A title commitment is a commitment by a title company to issue a title insurance policy upon closing. If, after closing, it is determined that the seller did not have the right to transfer the full interest in the real estate to the buyer, the risk will lay with the title company not the buyer. The seller's attorney, acting as an agent of the title company, will review the property's title history to ensure that there are no liens or encumbrances on the property and that the seller does indeed have free and clear title to the property.
The seller is typically responsible for ordering a survey of the property. The survey is a map showing the exact dimensions of the property being transferred. The buyer's attorney will review the survey to make sure that the buyer is receiving the exact property that he or she expects and that there are no previously undisclosed easements, which are portions of the property reserved for utilities or government purposes.
The seller will obtain a letter from any lenders currently holding mortgages on the property showing exactly how much must be paid to the lender at closing to satisfy the existing mortgage.
The seller will provide the buyer with letters from any relevant Homeowners or Condominium Association stating that there are no unpaid assessments, that any right of first refusal for the association to purchase the property has been waived, and proving that any common areas are insured.
Some municipalities require that the seller arrange for an inspection by the municipal government prior to closing. The seller's attorney is responsible for scheduling this inspection and obtaining a letter from the municipality stating that the inspection is complete. The seller's attorney will also obtain a letter from the municipality showing that all utilities have been paid for by the seller.
The seller's attorney will review the previous year's property tax information to determine the amount that will be credited to the buyer at closing in the form of a tax proration. You can learn more about tax prorations by by reading this article: The Top 5 Things to Look Out For in Your Residential Real Estate Contract.
Finally, the seller's attorney will prepare several documents for execution at closing: