Blog Post: Briana Tursick, Chicago Title
This information is relevant to all Buyers and Sellers of real estate. These are five important issues to know or be familiar with prior to a closing. Closers hear a lot of questions and comments about the transaction process at the closing table, but these are the most common issues that arise at this crucial time from both Buyers and Sellers.
1. Know and understand tax proration. It is very important to understand that Colorado property taxes are always paid in arrears, or after the year the property was assessed. To calculate your tax proration, divide the total amount of taxes for the calendar year prior to closing by the number of days into the year of the closing date to get the tax amount per day. That tax rate is then multiplied by the number of days from January 1 to the day of closing. The resulting amount is then credited to the buyer.
2. Review your HUD and Settlement Statements. Be sure to review these documents with your agent before closing. These forms itemize the services provided to you in buying/selling your home and how much each costs. Such expenses include items connected with the loan, escrow account deposits, commissions, title charges, etc.
3. Be prepared to bring certified funds and your ID. Once you have reviewed your HUD and Settlement Statements prior to closing, you will now know if you owe any additional fees at the closing table. Title companies will only accept certified funds, so a trip to the bank prior to the closing is necessary. It is also important to bring your ID for proper identification to all parties.
4. Sellers – be familiar with the tax documents. Sellers be aware of the tax documentation you will need to sign the 1083 - Information with Respect to a Conveyance of a Real Property Interest, the IRS form 1099 – used to report income, and to calculate the amount of taxes owed to the federal government, and finally, FIRPTA – Foreign Investment in Real Property Tax Act – a taxation law that imposes tax on foreign persons selling real property in the US.
5. Buyers – know your loan terms. Buyers know your loan terms before coming to the closing. There should be no surprises from your lender and you should be aware of the charges and fees in your loan package. Your closer will not be able to change these for you and will delay closing if items in the loan package need to be changed.
If you follow these points and communicate well with both your agent and lender, your transaction is sure to close smoothly!
Closing on the property is usually handled by the title company which issued the title opinion. We will be with you to provide answers and assistance for you during this process which usually takes from 30-90 minutes. I will be sure to review all settlement statements for you as Buyer for accuracy and reasonableness.
Time of possession is established at the time of negotiating the original offer. In Colorado, it is customary for the Buyer to take possession at closing or up to 2 days after closing.