The Closing – What Do You Do?

By James L. Goldsmith, Esquire

Closings make for good days. On the whole, everyone is fairly happy, if not a little harried. For all but the buyers it is a payday and by the closing date the buyers are well beyond their can-we-afford-it worries. As tickled as we all may be, matters of great import occur at settlement. I refer to not only matters of title and mortgage loans usually handled by the title agent. I also refer to matters of great import that are your responsibility.

Shortly after the buyer and seller became engaged, they took a second look to assure that the match was right. For the buyer, this meant peeking into corners, under carpets and everywhere there looms potential problems. The issues identified by home inspectors and others result in additional promises and terms. Sellers promise to repair and buyers reserve the right to reinspect.

The general rule is all promises and obligations of buyers and sellers are satisfied by closing. All of the purchase price is paid and all of the property is delivered with no lingering obligations. Occasionally, last minute issues cannot be resolved and certain obligations are fulfilled after settlement. This is dangerous territory and also the subject of previously written articles on the same subject. As for the general rule: it gets done by settlement.

On the sellers’ side, it is fairly easy. Count the money and if it is fully paid, the sellers’ requirements have been met. For the buyers, more is required. Having a pre-settlement walk-through is universal. How else can buyers verify that the sellers’ promise to convey the property in its “present condition” has been met? And how else does one verify whether repairs to be made before settlement have been made? Not only should buyers conduct a pre-settlement walk-through, buyers may wish to reserve the right to have inspectors or other professionals engage in a similar exercise to verify that repair work was done in a workmanlike manner and in accord with any specifications agreed upon.

The closing provides the last opportunity for buyers, working with their buyer agent, to run through the agreement and all addenda to assure that all obligations have been satisfied. Sometimes the satisfaction of an obligation is to be demonstrated by documents. Do you merely collect the documents and put them in the plastic folder or do you actually read them to make sure that they memorialize what you think they do?

I remember a lawsuit that involved the seller’s replacement of the onsite septic system. According to the agreement, the replacement system was to be “permitted.” On the day of settlement, the seller delivered the municipal document verifying that the new onsite sewage disposal system was a “permitted” system. Unfortunately, neither the buyer nor her agent read the permit. Had they done so, they would have seen that the permitted system consisted of a holding tank and not a septic system. Imagine the buyer’s surprise when one month after settlement an alarm indicated that the sewage system was full and required pumping!

The title agent will explain matters of title and will thoroughly review the mortgage documents with the purchaser. The title agent may not be aware of the promises and obligations that buyer and seller have agreed to that largely relate to property condition. It is your obligation to review with the parties these obligations so that your client understands the extent to which they have been satisfied and so that surprises do not follow.


Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2013

All Rights Reserved


Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.