Your Guide to Closing on Real Estate in Alabama
Purchasing a home or other piece of real estate is a huge investment, and for most people, it is likely to be the biggest purchase they will make in their lifetime. Though the entire real estate transaction process involves a lot of unique and complex issues, it is the closing process that poses the most challenges. It is at this point that titles pass from seller to buyer, balances are assessed, payments are made, and contracts are signed. Though the process may seem straightforward, it is easy for an inexperienced buyer or seller to make a mistake. Mistakes can be crippling at this point and can open the door for last minute disputes and unnecessary costs. You can avoid these mistakes and ensure that the entire real estate closing process goes smoothly by working with an experienced Alabama real estate attorney.
Closing on real estate involves several key documents, many of which need to be completed prior to closing. Those documents include:
- A copy of the signed contract, including any and all addendums;
- Complete contact information for all parties involved, including sellers, buyers, and realtors;
- Complete contact information for all lenders, brokers, and bankers;
- HOA contact information and guidelines;
- All information regarding the loan payoff for the seller, including information on the loan, account numbers, and social security numbers of buyers;
- Survey and home inspection results, if necessary;
- Home warranty information, if applicable;
- A copy of the Termite Letter, if necessary;
- Copies of mortgages, wills, deeds, trusts, Powers of Attorney, or other complete documents related to the transaction;
- Buyer’s hazard insurance agency contact information;
- A list of repairs that need to be completed before closing and/or invoices for repairs, if applicable; and
- Approval letter for one or both parties to use a Power of Attorney during the transaction.
Each of these applicable documents must be present prior to the signing of any real estate deal. At the time of closing, both parties must present the following:
- Current driver’s licenses for identification purposes;
- Tax ID information and/or social security number of both buyer and seller;
- Certification of funds or proof of bank wire for all closing funds from buyer; and
- Original, approved, and notarized Power of Attorney.
Why Work With a Real Estate Attorney at Closing
Alabama is one of the few states that requires a licensed real estate attorney to draft and prepare all legal documents involved in a real estate transaction (Ala. Code § 34-3-6(c)). “Legal documents” refers to deeds, titles, Powers of Attorney, Termite Letters, etc. This law was established in 1983 when a title company gave multiple purchasers title as joint tenants with right of survivorship when what he thought he had given them was title as tenants in common. As you can imagine, this led to a huge headache for the purchasers in later years, which is why the State of Alabama decided to limit the preparation of legal documents to a licensed lawyer.
Aside from remaining in compliance with state law, there are several other very good reasons to work with an attorney throughout the entirety of the real estate process. Below are just a few examples of when it is nice to have an attorney on your side:
- When you need to negotiate over who pays for repairs after a home inspection reveals costly issues;
- When a home has an illegal in-law unit with an existing tenant whom you want to evict;
- When you want to enter a rent-to-buy agreement; or
- When you are concerned about particular language in your purchase agreement.
Additionally, experienced attorneys have connections with reputable mortgage loan brokers, inspectors, surveyors, and other professionals in the area. Though you may not anticipate the need for a surveyor, if an issue arises with boundaries, it would be nice to have the right professional on call for a quick and fair assessment.
Retain an Alabama Real Estate Closing Attorney When You Make the Decision to Buy or Sell
Whether you plan to buy real estate in Alabama or sell real estate, it would be in your best interests to have a real estate closing lawyer on retainer and ready to help when an issue arises. Contact Cloud Willis & Ellis today to speak with one of our legal representatives regarding your impending real estate transaction.