When Things Get Stuck At The Closing Table

On today’s show we are talking about closing a transaction. States have different methods for recording a transaction on title. Some states use lawyers to close transactions. These are most commonly referred to as attorney closing states where a lawyer is required in addition to the title company. There are a total of 18 states that require attorneys to close. The remaining states can close transactions strictly with title companies. Some provinces in Canada that used to be exclusively lawyer close provinces also offer the option of closing with title companies. But these are less common, simply because that has not been the traditional practice. 

Simple residential transactions involve a buyer, a seller, a price and are usually based on standard real estate board contract. Everything looks familiar to the title agent and it’s a paint by numbers exercise. Drafting the closing statement is very standard and the title agent is following a prescribed formula for completing the transaction. 

In order to make things simple and repeatable many title companies create rule books for their title agents to follow. This restricted path is meant to eliminate possibility for errors and is designed to enhance the overall quality of the customer experience. 

But these rule books don’t contemplate the more complex structures associated with a commercial transaction and the complexity of a multi-party transaction with many moving parts and then further involving one or more qualified intermediaries who are also imposing their requirements on the closing process. 

You will often hear that what is being requested cannot be done. It violates the rule book at the title company. Of course the client is not going to be able to convince the tile agent that they need to change their process. 

In that instance, the only viable solution in our experience is to get your real estate lawyer, who hopefully is well versed in the complexity of the transaction to provide the direction to the title agent on how to conduct the transaction. The lawyer will tell them exactly the same thing that you did. But the title company will listen to the lawyer, when they won’t listen to you. This is one of those cases where there are so many people involved in closing the transaction that the most important role for you is to assign a quarterback for the entire transaction. That person’s role is to get people communicating who don’t think they need to talk to each other. Everyone is sitting in their corner with their rule book waiting for everyone else to meet the criterial stipulated in their rule book and nothing moves. 

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