Chapter 10 Title Closing and Settlement Procedures New Jersey Real Estate for Salespersons and Brokers By Marcia Darvin Spada Thomson/South-Western Copyright, 2006

Chapter 10 Title Closing and Settlement Procedures Chapter 10 Title Closing and Settlement Procedures

Chapter 10 Title Closing and Settlement Procedures  Chapter 10 Key Terms  Abstract of title  Actual notice/  constructive notice  Credits/debits  Notice of settlement  Proration  Real Estate Settlement  Procedures Act (RESPA)  Realty transfer fee  Survey  Title  Title closing  Title closing statement

Chapter 10 Title Closing and Settlement Procedures A Condo and Coop Closing Compared CondominiumCooperative Type of transaction Fee simple ownership Personal property; shares of stock Transfer documents Deed Proprietary lease Taxes at closing NJ Realty transfer fee NJ Realty transfer fee; flip tax

Chapter 10 Title Closing and Settlement Procedures Those Present at Closing  Seller  Buyer  Real Estate Agent  Title company rep  Lender’s, buyers and seller’s attorney

Chapter 10 Title Closing and Settlement Procedures Preliminaries to Closing  Deed and other closing documents  Survey  Title search-evidence of marketable title  Title insurance  Notice of settlement  Structural inspection/other tests  Homeowner’s insurance

Chapter 10 Title Closing and Settlement Procedures Real Estate Settlement Procedures Act (RESPA) RESPA Residential federally financed properties Eliminate Kickback/ Referral fees Provide information Prevent abusive practices Good faith estimate Buyer’s Guide to Settlement Costs HUD Form No. 1 Settlement Cost disclosure

Chapter 10 Title Closing and Settlement Procedures Possible Seller Closing Costs  Realty transfer fee  Broker commission  Attorney fee  Recording documents to clear title  Payoff off existing property liens  Condo/coop fees

Chapter 10 Title Closing and Settlement Procedures Possible Purchaser Closing Costs  Appraisal/credit report fees  Mortgage and deed recording fees  Attorney fees  Lender costs (escrow account, discount fees, loan origination fees, mortgage insurance)  Survey (sometimes paid by seller)  Homeowner’s insurance  Structural and other tests/inspections

Chapter 10 Title Closing and Settlement Procedures Calculating Prorations  A closing is held September 15 th. The annual property taxes of $6,000 have been paid. What will the entry for the seller be on the closing statement?  6,000 ÷ 12mos = $500  8 mos x $500 = $3,500  500÷2 = $250  $250 + $3,500 = $3,750  Credit to seller: $3,750

Chapter 10 Title Closing and Settlement Procedures Debits and Credits