Once the contract contingencies have been completed, the real estate transaction progresses to what is commonly called Closing. Closing simply means that each party completes their contractual obligations – the Seller provides a deed, and the Buyer provides the purchase funds. In Utah, Closings are completed by title companies who act as escrow agents for the parties’ transaction. The escrow agent holds the parties’ respective tender – the deed or the funds – until both parties have completed their obligations and the tender can be exchanged. This way, one party does not receive funds or title before the other has completed its respective obligations.
The escrow agent is also provided with closing instructions for steps that need to be completed in order to complete the transaction. For example, if there is a mortgage balance against the property being sold, the escrow agent will pay the mortgage off from the buyer’s funds. Typically, pro-rated property taxes will also be paid out of the funds received from the Buyer. The real estate agent’s commissions, premiums for title insurance, and anything else to be paid by either party will be deducted from the funds. The escrow agent will prepare wiring and accounting instructions commonly called “HUD’s” that detail where money is paid. That way, the Buyer is ensured to receive clear title to the property, without any mortgages or other encumbrances attached to it. The Seller then receives the balance of the funds once all items and obligations have been paid.
The Buyer then receives a Warranty Deed, which will warrant that he or she has received clear title to the property. The escrow agent will make sure to record the Warranty Deed in the County Recorder’s Office, which will give notice to everyone that the Buyer is the owner of the property. Once the funds are received and the deed exchanged, the transaction is considered “closed” or completed. At this point, the parties’ respective obligations and rights under the Real Estate Purchase Contract are completed.
This article is the 4th in a series of articles pertaining to residential real estate transactions in Utah. If you have any questions regarding residential real estate transactions, either from the buyer, seller, or real estate agent perspective, please contact us at 801-365-1030.