Closing Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Closing, written in plain English, along with examples of how it is used.
What is Closing?
It is the final procedure in the sale and purchase of real property between a buyer and a seller.In this all the agreements are finalised, documents are signed,funds are exchanged,title to the property is transferred to the buyer.The closing can be handled by the title company, an agent or an attorney.
History and Meaning of Closing
Closing is one of the most critical stages of a real estate transaction. It is the point where the buyer takes control of the property and the seller receives the proceeds from the sale. Closing typically involves several tasks, including the finalization of the sales contract, the transfer of funds, and the signing of all necessary documents. This process can be complicated, time-consuming, and stressful, which is why many sellers hire a real estate agent or attorney to guide them through it.
The concept of closing in real estate dates back to the early 20th century when standardized legal forms were first introduced to regulate property transactions. Prior to this, real estate deals were often conducted informally, with little documentation, leaving buyers and sellers vulnerable to fraud and misrepresentation. The formalization of the closing process helped to protect both parties and ensure that all aspects of the transaction were properly recorded.
Examples of Closing
At closing, the title company will conduct a thorough title search to ensure that the property is free and clear of any liens, encumbrances, or other defects that could affect ownership.
The closing process typically takes anywhere from one to two hours to complete and involves signing dozens of legal documents, including the deed, bill of sale, and mortgage.
It is important for buyers to have their funds ready before closing since the seller will not release the keys to the property until all funds have been received and the deal is complete.
In some cases, the buyer and seller may agree to a delayed closing, giving the buyer additional time to secure financing or complete renovations on the property.
Legal Terms Similar to Closing
Settlement: Settlement is the same as the closing- it's the point when the seller hands over the keys to the buyer and the buyer pays the seller.
Escrow: Escrow refers to a neutral third-party agent who manages funds and documents involved in a real estate transaction until all terms and conditions are met.
Possession Date: Possession date refers to the day when the buyer can take possession of the property. This date is often agreed upon during closing.