GUIDE TO THE RURAL LAND CLOSING PROCESS IN TEXAS

An old joke common among Rural Land Brokers is “once you have a signed contract, the easy part is over”. There is a lot of truth in that saying. Escrow, title and closing procedures involve many potential challenges. Hopefully, this blog post will shed some light on the process.

Who picks the Title Company

Generally speaking, the party that pays for the owner’s title policy chooses the title company which will handle the closing process. Most often the seller pays for the owner’s title policy because that is part of proving ownership. However, choice of title policy is negotiable and indicated in the earnest money contract. Either the seller or the buyer makes this decision, the real estate agents only make a recommendation.

Role of the Title Company

Usually, the closing process begins when title is opened with presentation of the earnest money contract to an escrow officer. The title company plays two important roles; acting as the escrow officer and providing a title insurance policy protecting both the buyer and the lender. I have included a discussion of the various party’s responsibilities, definition of terms and description of documents below.

Seller’s Agent Checklist For Title Company

• Provide Seller’s existing loan (if any) information to include name of mortgage company, loan # and loan balance.
• Copy of Listing Agreement with the seller.
• Broker’s commission disbursement authorization
• Provide copy of survey as per agreement in the earnest money contract. Some title companies require a survey and almost all lenders require a new survey with boundaries and location of improvements and any easements
• In the event of probate provide all documents you have. If you don’t have copies, contact the attorney and accountant who prepared them. This will save time.
• Provide escrow officer with Home Warranty company information to include person responsible for ordering.
• Copies of repairs with invoices to be paid out of closing proceeds.
• Upon receipt of the Title Commitment, review Schedule C for any issues that may require a response before closing.
• Review Closing (settlement) Statement 24 hours before closing.
• Confirm closing time and place at least 24 hours in advance.

Buyer’s Agent Checklist for the Title Company

• Provide signed earnest money contract together with required checks for earnest money or option periods.
• Provide Buyer’s Mortgage company contact information.
• Provide proof of homeowners insurance.
• Arrange for inspections called for in earnest money contract.
• Commission disbursement authorization.
• Check on status of agriculture or wildlife exemptions.
• In the event there are improvements, conduct final walk-through.
• Upon receipt of the Title Commitment, review Schedule C for any issues that may require a response before closing.
• Review Closing (settlement) Statement at least 24 hours before closing.
• Review closing disclosure statement.
• Schedule closing at least one week in advance.
• Make sure buyer and closer have all closing instructions, closing (settlement) statement and loan documents at least 24 hours before closing.

CLOSING

The actual closing will involve signing of various documents and disbursement of funds. The closing agent will describe each document as you sign them. The ownership is transferred upon signing of the appropriate documents. Texas is a community property state and both spouses should be present. Generally the seller and buyer have separate closing sessions. Your real estate broker can accompany you but their presence is optional.

Documents and procedures related to Closing Rural Land

Title Insurance. An insurance policy which protects the buyer and/or the lender in the event of issues which occurred prior to the closing.

Escrow. The title company is responsible for receiving, holding, record keeping and disbursement of all funds associated with the transaction.

Title Search. A title company will verify that the seller actually has a saleable and marketable interest in the property being sold. Many title companies use a third party to complete this work. The following items will be examined in a full coverage search. The process of resolving any issues related to title is referred to as “clearing the title”.

• Ownership
• Chain of Title
• Tax Search
• Liens
• Deed Restrictions
• Bankruptcy and Judgement Search
• Community Property
• Easements
• Divorce
• Resolutions and ordinances
• Probate
• Foreclosures
• Covenants
• Conditions and Restrictions

Settlement Statement. The Title Company will provide a breakdown of costs for both buyer and seller. It does not include information about any loan particulars.

Closing Disclosure Statement. This document contains information about a buyers loan. Receipt of the closing disclosure statement generally indicates clear to close status.

SUMMARY

The closing of a real estate deal consists of a lot of moving parts and can take a significant amount of time. Being aware of what is involved can help manage the process.

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Allen Realty Advisors represents buyers and sellers of fine quality rural land near Houston. We specialize in weekend retreats, country estates, farms and ranches, recreational property and investment land. Our market area is generally within 100 miles (two hours) of Houston.