Guide To Closing Process In Fairfield County CT. The customs described below are a compilation of customs adopted by the Fairfield County Bar Association and information provided by practicing attorneys. The actual Bar customs are available at www.fairfieldbar.com.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The seller's attorney, from a memorandum of sale, offer to purcahase or binder prepared by the real estate agent or broker. The seller's attorney orders condo/PUD resale certificates and bylaws when needed.
Greenwich – brokers rarely use binders. Terms of offer may be transmitted to seller's attorney by telephone; contract is expected within 48 hours.
2. Is a binder or deposit required of the purchaser? In what amount and when is it paid?
Purchaser is expected to deposit 1% of the purchase price with the real estate agent or broker when memorandum of sale or binder is prepared, or when offer is made. Another deposit may be made at contract signing time.
3. Who holds the deposit?
The seller's attorney. Occasionally, the real estate broker may hold the 1% binder.
4. How and when is the deposit released?
The terms of the contract determine when the deposit is released, if at all, prior to closing. Sometimes, the deposit is released to the seller when all contract contingencies, including the mortgage contingency, are satisfied. In most cases the deposit is held in escrow by seller's attorney until closing of title and then released to seller with the remainder of the closing proceeds. Where binders are used, the 1% should be transmitted from the real estate broker or agent to seller's attorney after contract execution, to be held in accordance with the terms of the contract.
5. Is a preliminary or contract search done? By whom?
Bridgeport and Danbury areas – purchaser's attorney brings title down from deed into seller and checks encumbrances, especially on new construction, prior to client signing contract, if possible.
Greenwich, Stamford, Darien, New Canaan, Norwalk, Westport, Weston, Wilton and Fairfield areas – seller's attorney brings title down or obtains copy of deed into seller in connection with preparing the contract. Purchaser's attorney usually reviews the encumbrances listed in the contract prior to client signing contract.
6. Who is responsible for ordering or performing the full title search? Who pays for the full title search?
The purchaser's attorney orders or performs the full title search. Purchaser pays for purchaser's own search. Purchaser's attorney often sends a copy of his / her title search to seller's attorney upon receipt.
All adjustments are based upon a 365-day year, and upon the actual number of days in the month, unless otherwise specified below. Adjustments are made on the basis of the purchaser owning the property on the date of the closing. Adjustments to the seller are made through the day immediately preceding the closing day.
Rent – rent adjustments are based on the actual number of days in the month. Security deposits are adjusted in favor of the purchaser. Interest is calculated at the rate set by the Department of Banking, from the date of the last payment of interest to the tenant or from the date the security deposit was placed with seller.
Oil – the oil in the tank shall be adjusted in favor of the seller. Seller shall provide at the closing a reading from seller's oil company of the amount of oil in the tank read within two business days of the time of the closing and the current price of that company's oil.
Common Interest Communities – Adjustments of Working Capital Account Contributions – Contributions required to be made by the first purchaser of a unit in a common interest community to a working capital account, reserve account or any extra common charge payment to the community association are not subject to recoupment or other adjustment on subsequent resale of the unit.
Common Interest Communities – Special Assessments – Special assessments of a common interest community, not part of the regularly budgeted common expense assessments, are not subject to adjustment. If payment of all or any portion of the special assessment is due and payable prior to the original closing date stated in the contract, the amount then due (without regard to any grace period) is payable by the seller; if all or any portion of the special assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the purchaser's responsibility.
Common Interest Communities – Adjustment of Monthly Common Charges – Regularly budgeted common expense assessments are adjusted as if they were payable on the first day of the month in advance, whether such assessments are in fact made on an annual basis and payable monthly, or assessed on a monthly basis.
Sewer Assessment, Principal and Interest Adjustment at Time of Closing – In those instances where the purchaser has agreed to assume and pay any outstanding sewer assessment and payment of all or any portion of principal installment on account of said assessment is due and payable prior to the original closing date stated in the contract, such amount then due (without regard to any grace period) is payable by the seller; if all or any portion of a principal installment on account of said assessment is due and payable on or after the original closing date stated in the contract, such payment becomes the purchaser's responsibility. Interest on sewer assessments shall be deemed paid in arrears. As a result, there will normally be an adjustment of interest in favor of the purchaser from the past due date to the date of closing. The purchaser shall receive a credit at the closing for interest owed but not paid at the time of closing. Interest only shall be adjusted as of the date of closing. Principal payments shall not be adjusted.
Real Estate Taxes, Sewer Use Charges, Similar Charges – Real estate taxes, fire district taxes, sewer use charges, association dues, and taxes imposed by special tax districts (collectively referred to herein as real estate taxes) shall be adjusted as of the date of the closing unless otherwise agreed. The tax year shall be the fiscal year of the town in which the property is located. All Fairfield County towns are now on a fiscal year commencing July 1 and ending June 30. Real estate taxes assessed upon the List of the preceding October 1 shall be considered to be applicable to the subsequent fiscal year.
Fairfield – The Town of Fairfield W.P.C.A. Annual Sewer Use Bill is mailed in September of each year and is payable in two (2) installments, which installments are due on October 1 and the following April 1. The October installment shall be deemed to cover the period from the preceding July 1 to the succeeding December 31. The installment due April 1 shall be deemed to cover the period from the preceding January 1 to the succeeding June 30. Therefore, if a closing was to occur on April 15 and the April 1 installment had not been paid by the seller, the purchaser would receive a credit from the preceding January 1 through April 14. If the April 1 installment had been paid, the seller would receive a credit from April 15 through the following June 30. If a closing occurs between July 1 and issuance of the September bill, the adjustment is based on the amount of the prior year's bill.
Trumbull – The Town of Trumbull Sewer Commission submits bills quarterly for sewer use charges applicable to a “Usage Period” consisting of approximately three (3) months preceding the Due Date of the bill. Adjustments are to be made based upon the Usage Period, notwithstanding the statement in the bill regarding the months covered by the “quarterly billing.” The seller is responsible for payment of any outstanding bills for Usage Periods predating the date of closing and the purchaser should receive a credit from the last day of the preceding Usage Period to the date of closing. Therefore, if a closing was to occur on January 6, 2000, the seller would be responsible for payment of the preceding November bill covering the Usage Period from June, 1999 to September, 1999, and the purchaser would receive a credit for the period from the date following the end of the Usage Period to the date of closing with a per diem based upon the amount of the bill for the preceding quarter (the last bill). It is recommended that an effort be made to determine if a new Sewer Use Bill can be obtained from the Sewer Commission for the period from the date of the last bill to the date immediately preceding the date of closing.
Bridgeport, Darien, Easton, Fairfield / Southport, Greenwich, Monroe, New Canaan, New Fairfield, Ridgefield, Shelton / Huntington, Sherman (Timber Trails), Stamford, Stratford, Trumbull, Weston, Westport and Wilton are all serviced by Aquarion Water Company. Water meter is read prior to closing and seller pays the final bill.
Bethel – (a) Water and sewer use charges are billed quarterly in arrears. Adjustment from seller to purchaser; purchaser pays when billed. Call Bethel DPUC for information. (b) Water and sewer assessments / liens are billed annually in arrears. Principal is assumed; interest is adjusted. Call Bethel DPUC.
Brookfield – No town water but there are several private water companies. Sewer use charges are treated as billed in arrears and adjusted from seller to purchaser.
Danbury – Water is billed quarterly in arrears on an assessment year. The assessment year begins September 1, and the first quarter is billed for in December. Charges not due and payable are adjusted from seller to purchaser based on last bill or on minimum gallonage. Purchaser receives and pays next bill. Sewer usage charges are billed semi-annually. Each six month payment covers three months in arrears and three months in advance, i.e., the March bill covers the period from January 1 to June 30 and the September bill covers the period from July 1 to December 31. Adjustments are done accordingly.
Newtown – United Water Company – (203) 426-2430.
Norwalk – Water is supplied by three taxing districts. First Taxing District – (203) 847-7387 supplies northern and eastern part of the city; Second Taxing District – (203) 866-3366 supplies western part of the city; and South Norwalk Electric and Water – (203) 866-4446 supplies the southern part of the city.
Redding – Well and septic except for Georgetown area, which is serviced by Aquarion.
Fuel – May either be treated as an adjustment or paid by separate check from purchaser to seller. Purchaser's wishes govern whether tank is topped or measured; in absence of expressed preference, tank will be measured and payment of adjustment from purchaser to seller will be calculated on the current price for oil.
Special Taxing Districts – Many towns have special taxing districts, fire or utility districts, which taxes are also adjusted. Brookfield, Darien, Easton, Fairfield, Greenwich, New Fairfield, Newtown, Norwalk, Redding, Sherman, Stratford, Trumbull, Weston, Westport and Wilton. Many of these districts are listed in CATIC's Connecticut Municipal Information Guide. However, it is suggested that the seller and town officials be asked about the existence of any such district.
1. Where is the closing held?
At the office of the buyer's attorney, unless lender or lender's attorney (if separate from purchaser's attorney) requires otherwise. The Greater Bridgeport Bar Association form contract does not specify a place of closing, leaving it to the negotiation of the parties.
2. How are closing expenses and purchase price paid at closing?
At closing, purchaser shall tender to seller cashier's, bank treasurer's, certified check(s) or wired funds, payable to seller's attorney as trustee for seller, for the balance of the purchase price due at closing as set forth in the sales contract adjusted in accordance with the sales contract and closing customs less the amount of all mortgage payoffs. Additionally, purchaser delivers separate cashier's or bank treasurer's certified checks or wires funds for payoff of seller's mortgages.
All checks shall be issued in accordance with the associated disbursements listed on the HUD-1 Settlement Statement and shall be made payable as directed in the associated mortgage payoff letters. At least one (1) business day before closing, for each mortgage payoff, seller shall provide purchaser's attorney with written directions stating the name of the payee and the total amount of payoff together with a copy of the associated payoff statement(s). Seller shall calculate the total payoff amount to include applicable per diems, late charges, etc. and shall be in an amount sufficient to pay the mortgage in full. Seller shall be responsible to prepare the mortgage payoff package(s) and transmittal(s). Immediately after closing, seller's attorney shall wire or hand deliver or send via overnight carrier the payoff funds and package to the lender(s).
Mortgage company checks or similar holding company checks, unless certified, should not be accepted at the time of the closing (Caveat: Conn. Gen. Stat. § 36a-758 states that any financial institution may pay the proceeds of a loan by means of a wire transfer provided such payment is made to the mortgagor, to the mortgagor's attorney or to the mortgagee's attorney. Purchaser's attorney shall determine prior to the closing what form of funding he will receive from the mortgagee's attorney. Mortgagee's attorney shall provide certified or bank checks when the financial institution wire transfers mortgage proceeds to an attorney trustee account in accordance with the statute.)
3. Who provides the necessary release(s) of seller's liens?
In the event seller's title is encumbered, seller's attorney shall deliver to purchaser's attorney a release for each encumbrance required by the contract to be released, together with recording fees for all such releases. Seller's attorney shall immediately cause payoff proceeds to be delivered to each such encumbrancer.
4. What is the procedure if releases are not available at closing?
Notwithstanding the above, if seller's title is encumbered by mortgage lien(s) for which the seller's attorney is unable to deliver release(s) of mortgage at closing, the parties shall close the transaction, provided that the following procedure is followed with respect to each mortgage lien:
Seller's attorney shall provide to purchaser's attorney the following documents at the time of closing: seller's attorney Undertaking and Indemnity in the customary form; copy of mortgage payoff statement provided by the mortgagee; and the mortgage payoff transmittal letter issued by seller's attorney in the customary form.
Purchaser's attorney shall tender to the seller's attorney the mortgage payoff check by cashier's check, bank treasurer's check or attorney's trustee check made payable directly to the mortgagee.
Seller's attorney shall cause the transmittal letter and check to be delivered to the mortgagee.
Seller's attorney, upon receiving the release of mortgage from the mortgagee, shall record and send a copy of it to purchaser's attorney with the recording information.
Seller's attorney shall take all necessary steps toward compliance with Section 49-8a of the Connecticut General Statutes for the purpose of filing a statutory affidavit in lieu of release of mortgage should such filing become necessary.
With respect to an equity line of credit, seller's attorney shall notify the lender to terminate all future borrowing rights as of the time at which the mortgage payoff statement is requested.
Alternative arrangements may be made between the attorneys regarding the breakdown of payment of gross closing proceeds and issuance of the mortgage payoff check, wire transfer of the mortgage payoff and/or hand delivery of the mortgage payoff check.
5. Who issues the title insurance policy or policies?
The purchaser's attorney. It is recommended that purchaser's attorney advise the owner to obtain an owner's title insurance policy insuring over all mortgages being paid off for which releases are not available at closing.
6. Who is responsible for obtaining mechanic's lien waivers, if applicable?
The seller is obligated to deliver to purchaser completed, absolute mechanic's lien waivers at closing whenever any work has been performed or services have been provided during the 90-day period preceding the transfer of title for which a lien could be recorded.
7. What other documents are required?
Seller is required to provide at closing a title insurance affidavit and a FIRPTA affidavit.
1. Who records the documents?
Purchaser's attorney. Prior to disbursing any funds from the sale of the property to seller, seller's attorney should allow purchaser's attorney a reasonable opportunity to record his / her documents on the land records.
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
In the process of recording, purchaser's attorney customarily delivers payments of taxes and water and sewer bills due. The seller's attorney transmits the mortgage payoff and real estate commissions.
3. Who notifies tax collector/assessor and utilities of change in ownership of property?
Utility companies require that purchaser and seller call them directly. Tax assessor and collector are notified by the Town Clerk once documents are received for recording. Guide To Closing Process In Fairfield County CT