Home Closing Preparation: An Interview with Douglas Tull

From Michigan Homes.com

Tell us a little bit about your company and its foundation.

Douglas A. Tull, P.C. is a two person law firm in Utica, MI – the senior member of the firm, Doug Tull, has been in practice since 1997 and at our current location at the southwest corner of Van Dyke and Hall Road since 1986.

What are some of the services your company provides?

We focus our practice on four primary areas, (1) Real Estate – residential and commercial including FSBO’s (for sale by owner), (2) Business Formation, Planning and Representation, (3) Estate Planning – with Wills, Trusts, Powers of Attorney and such, and (4) Decedent’s Estates Probate. We also provide civil litigation services in connection with these four areas of practice.

Please explain the general process of closing a home sale.

It actually starts with a good contract (not one prepared by a broker) that covers the important issues for both Purchaser and Seller and assigns risks appropriately (we do a lot of For Sale By Owners, as well); the next step is an inspection of the premises; next, is obtaining mortgage approval (and appraisal) if necessary; the next step is ordering and reviewing title work (to see whether Seller has clear title); once all of that is set, the process of closing usually involves the preparation of closing documents (usually done by the title company for a separate “closing fee”), the review, correction and approval of those documents (preferably by your attorney!) and, finally the closing, execution of closing documents (such as a deed and closing statement) and exchange of consideration. These days some title companies actually issue their title policy at the closing, more often it is sent out once the deed is recorded (and the recording of discharges of any Seller’s mortgages) – when the policy isn’t issued at closing, it is important to obtain a “marked up” commitment at closing which will show what the final policy of title insurance will look like once the recordings take place and then compare that with the final policy when it issues.

What is the Realtor’s role along this process?
Realtors, when involved, usually “list” the property for sale on “multi-list” exchanges in the area (for greater exposure to other Realtors and Purchasers), show the property, answer questions about the property, assist in preparation of the purchase agreement (preferably with assistance of a real estate attorney) and necessary disclosure statements, sometimes they also order title work (though if an attorney is involved, the attorney generally prefers to do so), they sometimes get involved in ordering payoffs of Seller mortgages, and attend closing – where they will be paid their commission.

How long can this process take?

It depends – but on average probably 60-90 days. The “closing process” from beginning to end depends in large part upon whether the Purchaser requires mortgage financing to purchase the home – as approval of the mortgage can take 30 – 45 days at times (pre-approval can help to speed that process) and because it is necessary for an appraisal to be done of the property for the mortgage company to satisfy itself that their underwriting requirements are being met (the loan to value ratio is most important requirement – for example if it is a 20% down conventional mortgage, the property must appraise for so that the mortgage amount is 80% or less than the appraised value to be approved). If no mortgage is involved, at a minimum, the time to obtain title insurance and review it and the time it takes to do a property inspection will dictate how soon you could close.

What are some issues that can arise during this process and how can they be resolved?

Purchase agreements with “conditions”, such as “sale of home by Purchaser” or “mortgage approval” can cause problems. When I represent a Seller I prefer not to have these conditions present in the Purchase Agreement. Purchasers may not have any choice but to include them in their Agreement and this may impact a Seller’s willingness to accept their offer. Problems can also arise with the inspection process – which sometimes result in Purchaser insistence that the Seller either fix items that are discovered on inspection or reduce the price. Most importantly, problems can arise as to matters of title. I always recommend a survey be done by the purchaser to make sure that they are buying all of the property they think they are buying and that they don’t have any neighbors “encroaching” on their property (or the property they think they are buying encroaches on their new neighbors). Title insurance is usually issued with an exception to coverage as to matters that would have been discovered by an accurate boundary survey. The only way to protect a purchaser is with a survey.

How does this process differ, requirement wise, for the Purchaser or the Seller?

The Seller is basically looking to cash out – so the process for them is less involved. Purchasers typically have to obtain mortgages, do property inspections and accept the condition of the property, and come up with the money to complete the purchase. Purchasing a house is usually the largest investment that a person makes in his/her lifetime. The cost of an attorney to represent and protect them in the process is small compared to the size of this investment. Title companies don’t represent Purchasers. Realtors may be agents for Purchasers, though often they are Seller’s agents – and their role is not to “protect” the Purchaser. Realtors usually are not attorneys and do not carry “malpractice insurance” to cover their “legal services” to a Purchaser or Seller, such as drafting a contract or deed. Attorneys usually do have malpractice insurance. That said, there is much more of a concern for a Purchaser of real estate than a Seller, because the Purchaser wants to make sure that title is clear (marketable) and that the money that they pay at closing is used to discharge any existing mortgages or other liens on the property.

What is the best way for people to reach you and your company?

Call our office at 586-726-5742, email me at dtull@tull-law.com, or visit our website at www.tull-law.com. We can be available for weekend and evening appointments for those who cannot make it in during normal business hours (8:30 a.m. to 5:00 p.m. weekdays).

Source: Home Closing Preparation: An Interview with Douglas Tull of Douglas A. Tull, P.C. Attorneys at Law

Posted in Real Estate Law.

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