Pitfalls That Can Cancel a Closing (On Closing Day)

You’ve been assigned your date, time and location for your property transaction closing, but you’re not in the clear yet! There are still some things that can compromise the closing and prevent it from happening. Heed this warning and make sure you or your clients do not fall victim to these issues:

 

  • Power of Attorney Issues 

 

  • Cumberland Title can and will – and prefers – to draft this document in our office so we know for sure it will be correct and acceptable for use at the closing, and no issues will arise as a result.
  • There is specific information that must be contained in a Power of Attorney to be valid for a real estate closing. Some people attempt to draft one themselves and have it notarized and bring it with them to the closing. Unfortunately, if the document is deemed invalid for use in this transaction, the closing cannot happen.

 

  • Out of State Parties (2.5% Withholding)  

 

  • If you are selling a home in Maine, for example, and Maine is not considered your permanent residence state, you will be subject to the 2.5% Out of State Withholding tax. Make sure this is addressed before the closing, or you won’t be closing that day due to additional paperwork needing to be submitted.
  • In the case of those that consider themselves “snow birds” or split their time between two homes in different states, the state where they reside a total of 6 months + 1 day or more, is considered their legal residence.
  • The state in which you are domiciled is considered your permanent legal residence. If you move out of Maine temporarily, without establishing domicile in the other state (or country), you continue to be domiciled in Maine.  This is the case even if you sell your home in Maine.

 

  • Last Minute Changes
  • We cannot stress this one enough – DO NOT pay anything or change anything in the days leading up to the closing. This includes – but is not limited to – taxes, homeowner’s insurance, home equity lines, in-store credit cards. All of these things affect the outcome of the already approved closing details/figures, which will then be incorrect and new documents need to be issued by lender and title company.

 

  • Funding Issues  

 

  • Also, please do not bring cash to a closing. A bank check just better protects both you and the title company – who most definitely doesn’t want to have to walk to the bank with that in hand to deposit it. Too many risks here.
  • If your funds are being wired to the title company, make sure that you allow time for that wire to come through to the title company. Wires do not necessarily happen “automatically”, and can take up to a few hours to arrive into the account. If there’s no money, there’s no closing.
  • If you were instructed to bring a check to closing, make sure that you do. If you were told that it had to be a bank check and not a personal check, make sure that it is.

 

  • Side Deals Discussed At The Closing Table 

 

  • So if you want to ask the seller if you can buy his ride on mower, too, make sure you do that before or after the closing.
  • Under no circumstances are any side deals or transactions to be discussed at the closing table during the real estate transaction. In fact, if this does occur, TRID rules require that the title company stop the closing immediately and not allow it to continue.

 

  • Improper ID

 

  • You are required to provide proof of identity at your closing. Both the lender and the title company require this. When you check in to the title company, chances are they are going to ask you for this right up front. You should be prepared to hand them a current, valid ID with photo. Think driver’s license, state ID, or passport. These should be valid and not expired. No ID = no closing.

 

A real estate closing should be a happy occasion. Please do your best to avoid these scenarios that will turn this happy occasion into a frustrating one. And a good rule of thumb, if you are unsure about ANYTHING leading up to the closing date, call your lender or title company for guidance.