It is critical that all deal points and loose ends be completed to the satisfaction of all parties before any closing documents are signed. Post-closing walk-throughs and other contingencies placed on final funding are not allowed by lenders, and certainly lead to conflicts between the parties, agents and title companies.

Law Talk: 

A disturbing trend has developed recently, where buyers show up at closing and sign all closing documents, but attempt to delay final funding until they have a chance to conduct a final inspection of the property. Such a practice leads to much uncertainty, as the title company may be in possession of all documents, funds, and authorizations to close, but lacks any control over the timing of buyer’s confirmation.

A title company, as a neutral third party, may only act in accordance with the joint instructions of both parties, and cannot ignore instructions by either party. If the parties’ instructions conflict with each other, then the title company cannot move forward until they reach agreement. If a buyer makes a request at the closing table that the title company hold off on final funding until an inspection occurs, the title company cannot move forward until the buyer provides the title company with a written confirmation to proceed. However, a buyer should know that without a tri-party escrow agreement to the contrary, the buyer does not have the right to make such a demand, and may be liable to the seller for damages if closing is delayed. Typically, the buyer signs a closing affidavit at closing, providing that all contingencies are met, that the title company may close and fund upon receipt of all documents and monies, and that the buyer accepts the property in its present condition. Once all the documents are signed, a buyer may not have the legal right to hold off funding; as a result, it is critical that all inspections, repairs and other issues be dealt with completely before the buyer ever sits down at the closing table.

This Title Tuesday Tip is provided courtesy of Rattikin & Rattikin, LLP, attorneys and counsel for Rattikin Title Company and is not a legal representation or statement of law. Please confer with your legal counsel for any and all legal questions.