Real Estate License Exam: What Happens after the Closing
A few things take place after the closing. You will need to know the basics for the Real Estate License Exam. Although ownership of the property changed from seller to buyer at the closing, the final closing statement needs to be prepared and a variety of documents need to be recorded.
Preparation of the final closing statement
A preliminary closing statement, sometimes called a settlement statement, usually is prepared ahead of time. Until the closing is complete and final costs are allocated, the final settlement statement cannot be prepared. The most common form of closing statement for residential properties is the HUD Form 1 Uniform Settlement Statement, which is prepared at or just after closing.
Copies of the statement are sent to the buyer and seller along with many other necessary documents. Closing statements can be prepared by anyone with all the appropriate information, but typically the buyer’s or seller’s attorneys or the title company prepares the closing statement. It’s primarily a financial document stating who owes what to whom and who has already given over money that will be distributed.
Record the right documents
The act of recording the transaction documents is the final step in the closing process. The documents are recorded at the appropriate government office that is designated for this purpose. Documentation of real estate transactions usually takes place at the county level, meaning you file documents in the county where the property is located.
You need to find out the name of the office or department where deeds and other such documents are filed in your location. Typically, the title company files the documents but it could also be handled by one of the attorneys or anyone else connected with the transaction, for that matter.
All documents relating to an interest in real estate need to be filed. Deeds, mortgages, liens, long-term leases (usually more than a year), and easements are typical documents that are recorded. The act of recording provides what is called constructive notice to the public.
Constructive notice provides an opportunity for anyone who’s interested to research the records. These public records provide parties who have an interest in the property in some way — brokers, attorneys, abstractors, and the public — an opportunity to investigate the ownership of the property and possible encumbrances on the title.
Recording usually involves payment of a fee, or sometimes two, usually for the act of recording itself. Perhaps a dollar a page or some other amount is charged for actually processing the document. In addition, the recording office may also be the office to which the state and sometimes local transfer taxes are paid.
You definitely want to find out whether your state charges a transfer tax on real estate transfers and/or a mortgage recording tax and how much they are. These taxes usually are based on the sale price of the property or the amount of the mortgage loan. In some cases, states have created surcharges for high-value property sales. Local municipalities, on occasion, also have created their own transfer tax.