Closing on a home requires attorney’s expertise
In most Illinois communities, it is common for the home buyer to receive the owner’s title insurance policy at the seller’s expense. Your contract should make this a requirement.
A commitment to issue this insurance policy is furnished to your attorney prior to closing. It will show who owns the property, what liens or other matters affect the seller’s ownership (such as mortgages, unpaid taxes or judgments), as well as any easements, building restrictions, set-back lines or other matters of record which affect the property. Your attorney will review this title commitment and require that the seller clear up any items which are not permitted by your contract and which would adversely affect your ownership rights.
After closing, you will be issued an owner’s title insurance policy which insures your ownership rights subject to the terms of the policy. Many form offers to purchase real estate include a provision which obligates the purchaser to take the property subject to all existing easements, covenants, reservations and restrictions of record. If such an offer is signed by the prospective purchaser and accepted by the seller, the purchaser has already agreed to accept any objectionable encroachments which may exist, all without knowledge of their existence. This common occurrence demonstrates again the necessity of having qualified legal counsel to assist you and to oversee the entire process.
If you are obtaining financing to purchase the property, your lender will require that the title company issue, at your expense, a title policy insuring the validity of your lender’s mortgage. This is commonly called a loan policy or mortgage policy. It insures only the lender’s interest and does not take the place of the owner’s policy issued to you. The commitment for mortgagee's title insurance should be sent to the lender sufficiently in advance of the closing.
If there is more than one buyer, your attorney will explain to you the various title-holding alternatives available to co-owners. These are primarily tenancy in common, joint tenancy, or tenancy by the entirety. If you are unmarried and living with a partner, your attorney may suggest that you enter into a written agreement with your co-owner, to spell out such things as sharing of expenses, unequal contributions, and terminating the co-ownership. Inheritance rights will be determined by the form of ownership as well as your individual estate plan and state law.
Your real estate agent should help you arrange a pre-closing inspection so you can determine that the seller has completed any repairs required by the contract and that the property is otherwise in the same general condition as when you entered into the contract.
The contract will control the time of transfer of possession from the seller to the buyer. However, circumstances sometimes prevent absolute compliance with the contract. Rather than terminating the contract or changing the closing date, the parties may wish to negotiate either pre-closing occupancy by the buyer or post-closing occupancy by the seller. Your attorney will point out the risks inherent in such situations and should draft an agreement to address such concerns as occupancy charges, utility payments, insurance considerations, maintenance and repair, penalty provisions, and other consequences of non-owner occupancy.
Once the mortgage loan is approved, the title insurance commitment issued and approved, the property surveyed, and the final inspection of the property completed, you are ready to close. The closing will take place at the office of the title insurance company, the lender, or at the office of one of the attorneys. The closing should be attended by you, your attorney, the seller, the sellers’ attorney, the real estate agents, the escrow agent or closer, and may include the lender.
There will be many mortgage loan documents and other closing documents to review and sign at the closing. Your attorney will explain these to you and assist you to determine that they are accurate and appropriate. You should receive copies of all documents you sign at the closing, as well as the keys, garage door transmitters, and any warranties and instruction manuals the seller may have available.
Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.