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Frequently Asked Questions

Demystifying the closing process

Okay, you’ve now signed a contract to buy or sell a property. Congratulations! But what happens next? What are the steps you need to take to reach closing?

Chicago Title – West Loop has created this FAQ for you to help demystify the closing process. The FAQ contemplates a typical home sale with a third-party lender financing the purchase. Every transaction is unique, because each buyer, each seller, and each piece of property is unique, so your own experience may vary from the scenario presented in this FAQ. But this FAQ will still help you understand the generalities of the closing process.

What happens after I sign the contract?
What is earnest money?
What happens after the title insurance company receives the contract?
What is a commitment for title insurance?
Okay, I’ve got my commitment for title insurance. What happens next?
Who decides what time we will close?
What is a settlement statement? And what is a closing disclosure form?
How do I bring my funds to closing?
How long will closing take? And do I really have to sign all of this stuff?
What do I do if I have more questions?


What happens after I sign the contract?

The contract is usually brought to a title insurance company by one of the parties’ real estate agents along with the buyer’s earnest money check, made payable to the title insurance company. The buyer may also write an option fee check to the seller, which should be delivered directly to the seller.

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What is earnest money?

Basically, earnest money is deposited by the buyer to demonstrate that the buyer is sincere (or “earnest”) in his desire to purchase the property. In the event that the buyer defaults in the purchase of the property, the earnest money can also serve to compensate the seller for the time that the property was off the market while it was under contract. However, there are a number of scenarios where the buyer may receive a refund of his earnest money despite not purchasing the property. Review your contract and consult with your real estate agent or attorney to determine what will happen to the earnest money in your particular transaction.

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What happens after the title insurance company receives the contract?

The title insurance company will research the property’s history, including whether the seller has any liens filed against him personally. The results of the research are compiled into a commitment for title insurance, which is then furnished to the parties.

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What is a commitment for title insurance?

A commitment for title insurance is the title insurance company’s promise to insure your title to the property once you close and the company is paid the premium for its insurance policy at closing. The commitment is basically made up of four “Schedules”, lettered A through D:

Schedule A describes the property, identifies the buyer and the lender, and identifies who is the current owner of the property.

Schedule B lists exceptions to the title insurance company’s promise to insure your title. Basic exceptions include restrictions, easements, mineral reservations, and future taxes.

Schedule C is a list of items that the title insurance company will require either at or before closing before it will issue a title insurance policy. Problems with a property’s title or related issues will usually appear on Schedule C. Parties may have to work to “clear Schedule C” before closing, and their escrow officer can help with that process. However, many items appearing on Schedule C can be easily resolved at or before closing.

Schedule D provides certain regulatory notices to the parties, including the amount and disposition of the title insurance premium.

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Okay, I’ve got my commitment for title insurance. What happens next?

The buyer will perform his due diligence for the property, which will typically include having the property surveyed and inspected. The buyer may also spend time working with his lender to secure his financing. The parties may engage in further negotiations to amend the contract. Assuming that all of the details have been resolved, the parties or their real estate agents will contact their escrow officer to set a time for the closing.

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Who decides what time we will close?

Many factors determine the closing time, including the parties’ personal schedules, the readiness of the lender, and the importance of same-day funding. It is often convenient and beneficial for the parties to close together, but your escrow officer can also arrange for the parties to close separately, if necessary.

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What is a settlement statement? And why can’t I make heads or tails of it?

A settlement statement basically shows where all of the money is coming from and going to in your transaction. Your escrow officer will furnish a settlement statement for the parties and their agents to review before closing.

A settlement statement is separate and distinct from a closing disclosure form (a “CDF”), which is a document promulgated by the federal government to replace the old HUD-1 and TIL forms.  A CDF is used for the majority of transactions in which financing is involved.  While a CDF will dupicate some of the numbers already referenced in a settlement statement, it will also include important information about the terms of a borrower’s loan.  Your lender will provide you with a CDF at least 3 days before closing.

If your settlement statement or your CDF seem confusing, then please let your escrow officer know as soon as possible, and we’ll be happy to provide you with an explanation.

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How do I bring my funds to closing?

Your funds for closing will be paid to the title company, which will hold them in escrow until your closing is completed. Chicago Title prefers that you wire transfer your funds from your bank to ours (our escrow officers will provide you with wiring instructions to help you make that transfer). Wire transfers should be done prior to closing to avoid any delays in funding your transaction.

Chicago Title will also accept cashier’s checks in amounts exceeding $20,000 if those checks are issued by a national bank. The funding of your transaction may be delayed if you provide Chicago Title with a cashier’s check that is larger than $20,000 and that is not drawn on a national bank. Cashier’s checks totaling $20,000 or less are acceptable as long as they are drawn on an American bank in good standing.

Also, please note that Chicago Title cannot accept personal checks totaling over $1,500 or cash amounts exceeding $20.

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How long will closing take? And do I really have to sign all of this stuff?

Parties should allow an hour for signing all of their documents at closing, though many closings can be accomplished much more quickly, especially if no financing is involved. Some parties prefer to meticulously review each document at closing, while others wish to sign their documents as fast as possible. Your closing will be unique and will proceed at its own pace. Please be sure to let your escrow officer know if want to take more time with your documents or if you need to speed things up.

Where financing is involved, your closing will not truly be complete until the lender authorizes your escrow officer to fund your transaction. Funding may be authorized within a few minutes of your signing your papers, or the lender may delay funding until the next day. You may choose to wait at the title insurance company until funding is authorized, or you can go about your day while your escrow officer keeps tabs on the situation. Most transactions do fund on the same day that the parties sign their documents, but one should never assume that will be the case. If you need to have a better idea about exactly when your transaction will fund, please contact both your lender and your escrow officer in advance of closing.

And yes, you really do have to sign all of the documents presented to you at closing. Almost all of the documents are required either by your lender, by statute, or by regulation. A few documents are also required by the title insurance company to make your transaction insurable. Your escrow officer can explain to you the reason for each piece of paper, if you so desire (though your escrow officer will not provide you any legal advice regarding the documents). But if you want your transaction to close, then signing each document is a must. Your escrow officer is sympathetic – we get tired of paper too! – but your escrow officer still has a duty to make sure that your closing complies with all contractual, lender, and legal requirements and that your transaction is handled the right way.

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What do I do if I have more questions?

You call your escrow officers at Chicago Title – West Loop and ask us. Helping our customers is always the best part of our day, so we are always happy to answer your questions and to make you as comfortable with the closing process as possible.

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