Saturday, March 15, 2014

What does a Seller need to know for a real estate closing in Illinois

My clients ask what needs to be done for a real estate closing when they are the seller.  First thing is I take care of getting everything they need.  There are several documents that need to be produced or procured.  They are: 

  1. The deed.  What is a Deed?  The deed transfers ownership from the seller to the buyer.  The typical real estate deal uses a Warranty Deed.  This transfers everything from the seller to the buyer.  While I would not accept a Quit Claim Deed, some transactions in a divorce use that deed to transfer property from one spouse to another.  A Quit Claim Deed only transfers what the seller actually owns to the buyer.  For example, if the Lassie and Flipper are getting divorced, and Flipper is getting the house, then Lassie needs to transfer the property to Flipper with a deed.  If before the transfer, Lassie sells her interest to Mr. Ed, then she owns nothing.  When she signs the Quit Claim Deed, she is not transferring anything to Flipper.   Also, she is not committing fraud when Lassie signs the Quit Claim Deed because Lassie is only transferring what Lassie owns, which is nothing.  If Lassie is required to sign a Warranty Deed, then Lassie is promising that Lassie owns the property.    There are other Deeds, such as a Judge’s Deed, that are rarely used.
  2. The title commitment.  Title Commitment is used to insure to the buyer that they are buying the property.    Everyone knows the statement; do you want to buy the Brooklyn bridge?  At a real estate closing, the buyer gives the seller money for the property and the seller gives the buyer a piece of paper that states “Deed”.  The buyer has no way to know whether the seller owns the property.  For the buyer to protect themselves, they require from the seller an insurance policy guaranteeing that the seller owns the property or the insurance company (Title company) will pay for the damages.   The seller gives to the buyer a few days before the closing a Title Commitment.  This contains all of the information the buyer needs to know for the closing and insurance policy.  These are legal documents produced by a title company or an attorney.   Because these are complex, it is essential that an experienced attorney review this.
  3. Bill of sale.  A Bill of Sale is a document transferring all of the items in the house that are not the actual building.  For example, washer machine, dryers, shelves, and more.  Items that are attached to the property or building that would damage the building or land when removed are typically not part of a Bill of Sale.  This is a simple document, but if not done right, the seller or buyer may be harmed.
  4. Settlement statement and RESPA.  Closing statement is a document produced that contains where every penny from the sale is coming from or going .  It is an accounting between the buyer and seller.  The RESPA (this is changing soon pursuant to federal law) contains every penny related to the buyer, seller and any other party that is giving or taking money related to the real estate transaction.
  5. State and county transfer tax forms and stamps.  The State and County transfer forms for Illinois differ depending upon what county.  Some counties rely on the paper State of Illinois transfer form.  Other counties rely on the electronic transfer form.  Knowing which form is essential to the closing.
  6. City or village transfer tax forms and inspections.  Most Cities or Villages in Illinois have their own requirements.  These need to be determined at the beginning of the real estate contract.  For example, most Cities or Villages require the payment of real estate transfer taxes.  However, it differs from city or village.  Some require the seller to pay and others require the buyers to pay. Some require stamps to be purchased before the closing, others don’t.   In addition, some cities or villages require an inspection of the home and repairs to be done.  Some require that the water bill be paid before the closing.   It is essential to the real estate closing that the requirements be followed and done before the closing.
  7. The survey.  The seller and/or lender will want a survey.  The survey determines if the home is actually located on the property.  There is at least one block in Illinois where the homes are partially on the neighbor’s property. 
  8. If the property is part of a condominium or townhome, then there are all sorts of requirements.  The first step is to request from the condominium or townhome the requirements.  Also, the seller will need to produce a paid assessment letter and right of first refusal letter.
  9. If the sales property is held in trust, the trustee will have requirements to be met.  The trustee will send to the seller a Trustee’s deed and a paid proceeds letter along with other documents that may be required.  This part of a closing is too substantial to cover here.  Contact me if you have questions about this.
         Contact Jeffrey M. Jacobson at or 331-222-9529