Sellers FAQ

Commonly Answered Questions for Home Sellers

What Risks Are Covered with Title Insurance?

A title search and the issuance of title insurance means the ownership of the property can be cleanly conveyed to the new owners. During the search, the history of the property is researched verifying that all previous claims or liens have been satisfied, allowing a clear title to be issued. If any claim is overlooked, the title insurance protects the owner from the claim. Remember that if it’s not in writing on a real estate deal, it’s not enforceable.Lender’s Title Insurance insures the priority and validity of the mortgage loan and is required by banks and mortgage companies.Owner’s Title Insurance protects your investment by:

• Errors in the public records such as incorrect information in deeds and mortgages regarding names,signatures or legal descriptions.
• Judgments, liens, mortgages, unpaid taxes and assessments claimed against the property.
• Claims of ownership by others to your insured property.
• Invalid Deeds due to forgery, fraudulent transfers or transfers by previous owners who were minors or not mentally competent.

I’m Buying/Selling a For Sale By Owner (FSBO) Home. What Do I Need to Know?

Note that while FSBO’s are appropriate in a variety of circumstances, such as sales to family members, it is highly recommended that a seller consider hiring a real estate agent to sell their home. Statistically, a good agent will be able to market and present your home in such a way as to bring a higher selling price than a layperson or seller would be able to attain on their own. Also, if a prospective purchaser is already represented by a buyer agent, that buyer agent will typically require that you pay between 2.4 and 3 percent of the sales price to provide their services to facilitate the transaction.

If you do decide to sell your home “By Owner”, please contact us and we at Zdenek Law Firm can provide a range of services to you based on your needs that will enable you to complete the transaction legally and seamlessly. This includes consultations to walk you through the process, contract and disclosure preparation, repair negotiation assistance, and a variety of other services that are essential to the home buying and home selling process.

Should I Make My Next Payment to My Mortgage Company?

You should discuss this with your lender, broker or agent, but generally if, as a result of the sale or refinance, your old loan will be paid off by the 15th of the month, then you will not need to make that payment for that month. This is because typically no late charges accrue until after the 15th.

Why Is My Payoff Higher than My Newest Statement I Received From My Lender?

Mortgage payments are made in arrears, meaning that the month in which you pay your mortgage actually covers the interest from the prior month ( i.e. October payment covers September’s interest. Because you will not be making the payment for the month following the closing (i.e. October closing, you will not make November payment), the interest from the 1st of the month through the closing date must be added to the principal balance to calculate the “payoff”. Also, most mortgage companies charge between $10-75 to provide the payoff information, which further increases the payoff amount.

Can I Sign the Seller Closing Documents Prior to the Scheduled Closing Date?

Yes. We understand that with all of the moving parts associated with a seller exiting their home, the scheduled closing time may not be convenient for the seller. We are sensitive to that issue and are more than happy to accommodate the seller to that end. If you would like to come to our office to execute the closing documents prior to the scheduled closing date, please contact our office to set up a time. We DO NOT charge an extra fee for this service.

Please be aware that pursuant to the terms of your contract with the buyer, you must provide documentation at or before closing that effectively transfers or conveys your interest in the property. Commonly referred to as a Deed and Lien Waiver, these documents must be prepared in conformity with North Carolina Law to effectively convey title. North Carolina Law allows us to perform this service on your behalf, or you can make other accommodations to prepare the requisite documentation. In the event we are not providing this service, please provide the documents, or at least a copy of the documents, two days prior to closing for our review.

In either case, please provide your preference on the SIS, so that we may plan accordingly. Our fee for facilitating the sellers side of the transaction is $150. If you would like us to prepare the transfer documents that are required per your contractual obligation, that fee is only an additional $100 for a total seller fee of $250.

When Can I, the Seller, Get My Money from the Closing?

In North Carolina, the closing attorney is not allowed, under the current rules of the North Carolina State Bar, to disburse any funds, including the seller’s proceeds and/or the realtor’s commission, until the deed and deed of trust are recorded in the County Register of Deeds office. This means that you will not get your proceeds check at the closing table. If you recall a closing where you got your check during the closing, then it took place in another state, or the attorney was operating at a time when the applicable State Bar rules were different. The attorney’s office will need at least one hour after closing to deposit the purchase funds, update their title search (to make sure no liens or adverse conveyances have been recorded just before or during the closing), and to record the documents.

Click here for more information about the NC Good Funds Settlement Act.

The House I am Selling Is In My Name Only, Does My Spouse Have to Attend the Closing?

Yes, your spouse must also sign the deed. This is because spouses have potential property rights in any real property their spouse owns, and they must release those rights if the property is conveyed. This is true even if you, the owning spouse, got the property before you were married, or inherited the property from your family, or you have a prenuptual agreement.

What Do I, the Seller, Need to Bring to Closing?

Everyone will need to bring some current (not expired)government-issued identification with your photo on it, such as a driver’s license, passport, or military ID.

• The buyer will need to bring money owed for the completion of the transaction in the form of “certified” funds, such as an official bank check, certified check, cashiers check, or money order (or wire transfer, or even cash), made payable to the trust account of the closing attorney.
• Sellers often think they need to bring their original deed to closing, but this is not really necessary in North Carolina. The recorded copy of the deed in the County Register of Deeds office, which the attorney examines during the title search before closing, is more important than the actual original deed.

The above guidelines are only general; in your specific situation the closing attorney might modify or add to them. Check with your agent or the attorney a few days before closing to confirm you have everything you need.

What Costs Are Involved in Selling a Home or Property?

Typical Home Seller Expenses:

• Deed preparation (attorney fee)
• Excise stamps paid by the seller to the State of North Carolina are $1.00 per $500.00 of sales price.
• Sellers share of property taxes based on the calendar. Note that any closing after July 7 will require us to pay the tax bill at closing. Closings prior to July 7 will require seller to credit buyer the sellers portion of the tax bill based on a calendar year, as per the Offer to Purchase. These prorations are NOT based on the counties fiscal year.
• HOA transfer and certification fees
• Real estate commission if an agency is involved
• Fees associated with loan payoff or transferring funds into a checking account (overnight fees, electronic fund transfer)
• Any costs seller has agreed to under the Offer to Purchase

My Spouse Has My Power of Attorney. Can She Sign for Me at the Closing, So I Won’t Have to Attend?

Possibly. You need to inform the closing attorney that you want to do this, because he or she will need to see the Power of Attorney beforehand to see if it is valid for your real estate closing. Also, the attorney will need time to prepare additional documents in this situation, and the original Power of Attorney will have to be recorded. I often see Powers of Attorney that the persons filled out on a form they got at an office supply store; I HAVE NEVER SEEN such a “homemade” Power of Attorney that was valid for a real estate closing.

(IMPORTANT NOTE, added 1-27-2000: Thanks to a recent change in North Carolina Law, eliminating the requirement of a “seal,” many such “homemade” Powers of Attorney, prepared from software, etc., might now be valid for a real estate closing, but it is still critical that they be reviewed by the attorney before closing.)

Please note also that a Power of Attorney, though perfectly valid, might have been written to be used only for an earlier, specific closing or transaction. Such Powers of Attorney, containing a limitation to specific property, a specific mortgage loan or lender, or an expiration date, are very common.

In this case you will need to sign a new Power of Attorney.If you are a borrower on the mortgage, your lender also has to approve your non-attendance at the closing through the Power of Attorney; many lenders will require you to attend anyway (if you want the loan). Most lenders that allow Powers of Attorney, require that they be specific for the transaction, as described above.

How Do the New Regulations Implemented by the CFPB Affect My Home Purchase?

The Consumer Finance Protection Bureau (CFPB) was created as an advocate for consumers that require a loan for purchases such as a buying a home, a car or paying for a college education. The Bureau’s intent is to help place regulate and simplify the process of financing in an effort to mitigate the confusion often associated with taking out a large loan.

Click here for more information about “Know Before You Owe” initiative.

I Am Expecting Proceeds After Closing. May I Have Those Proceeds Wired to My Bank?

Yes. Our fee to wire the funds to your account is $25 and can be deducted from your proceeds. You will need to provide our office with your wiring instructions prior to or at closing.

I Want to Terminate My Contract. What Should I Do?

You should contact your agent and let them know that you would like to terminate the contract. If there is a dispute with regard to the release of the earnest money or who is entitled to it, the agent by law may not disburse the money to anyone but the clerk of court, and the parties will be forced to plead their case, so to speak, in front of a judge or magistrate, who will then decide how the earnest money is to be distributed. A termination of contract should be executed so that the buyer and seller can move on. In the event the parties are able to negotiate the terms of the release of the earnest money, a termination of contract setting forth those terms should be executed by the parties and the disbursement should be made by the agent according to those terms.

I’m Buying/Selling a Home in Foreclosure. What Do I Need to Know?

Purchasing a home in foreclosure often appears to be a good value, but you should consider factors outside of the price so you will know what to expect with a foreclosure listing.

• The purchase of a foreclosure often is a “cash only” sale.
• Can you view the actual condition of the home inside and out before placing a bid? The home may be in need of extensive repairs which can drive up the actual cost of the home.
• Are there liens for taxes or mechanics liens that the winning bidder will be responsible for?
• Is there a redemption period for the previous owners? If so, how long do they have the ability to buy the house back before you can move in?

Zdenek Law Firm, PA represents several investor clients that are always looking for a “good deal”. While foreclosures often provide that benefit, the foreclosure landscape is filled with potential pitfalls that can severely affect the “deal” you are getting. If you are an investor or would like to become one, please contact us so that we can consult you on the process. Jeff Zdenek has bought/sold/flipped several foreclosures in his 20 years of practice, and has counseled countless individuals on the process, from beginning to end. He is well suited to guide you through the process when you are ready, from the formation of your LLC to your bid on the proverbial “courthouse steps”.

When Will I Know the Date of Closing?

We make scheduling your closing easy. You can schedule your closing on our website, or you can call and email us to do so. If you are paying cash, we need at least one week to complete the title work and otherwise prepare for your closing. If you are getting a loan, you should communicate with your lender to determine how long they will need to underwrite and prepare your loan for closing. Once your lender furnishes you a date, you can then schedule your closing with our office. Typically the closing is scheduled by the buyers real estate agent.

What Is a 1031 Exchange?

In a typical transaction, the property owner is taxed on any gain realized from the sale. However, through a Section 1031 Exchange, the tax on the gain is deferred until some future date.

Section 1031 of the Internal Revenue Code provides that no gain or loss shall be recognized on the exchange of property held for productive use in a trade or business, or for investment. A tax-deferred exchange is a method by which a property owner trades one or more relinquished properties for one or more replacement properties of “like-kind”, while deferring the payment of federal income taxes and some state taxes on the transaction.

The theory behind Section 1031 is that when a property owner has reinvested the sale proceeds into another property, the economic gain has not been realized in a way that generates funds to pay any tax. In other words, the taxpayer’s investment is still the same, only the form has changed (e.g. vacant land exchanged for apartment building). Therefore, it would be unfair to force the taxpayer to pay tax on a “paper” gain.

The like-kind exchange under Section 1031 is tax-deferred, not tax-free. When the replacement property is ultimately sold (not as part of another exchange), the original deferred gain, plus any additional gain realized since the purchase of the replacement property, is subject to tax.

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