When Things Get Stuck At The Closing Table
Welcome to the Real Estate Espresso podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. On today’s show we’re talking about the complexities associated with closing a real estate 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 both a lawyer and a title company are required. Out of the total, 18 states in the US require attorneys to close. The remaining states can close transactions strictly with a title company. Provinces in Canada that used to be exclusively lawyer-closed provinces also now offer the option of closing with title companies, though this is less common.
One primary function of the title company is to act as the agent for the title insurance policy. But the role it plays when more complex structures are involved like a commercial transaction or a 1031 investment is more significant. For instance, in the case of a 1031 investment, these transactions are often structured as tenants in common agreements where each owner is listed directly on title, a protocol that is not standard and requires expertise and guidance.
As these transactions involve multiple parties and have many moving parts, they demand a higher level of skill and precision to close them effectively without errors. It’s also a must to scrutinize the closing statement carefully before signing off on the deal to avoid any errors.
It is critical to choose a title company that has the experience and right skill set for executing complex transactions and one that understands the intricacies of powerful legal financial tools, such as the 1031 exchange. Also, it’s necessary to have a lawyer well-versed in these kind of transactions who can guide you when things get stuck at the closing table.
Remember, the best way to handle a complex transaction is to have a well associated team: a proficient title company, an experienced quarterback on your side, and a competent lawyer. Now go make some great things happen and have an awesome rest of your day. We’ll talk to you again tomorrow.
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