Guide to Closing Process in Litchfield County, Connecticut. The customs described below are a compilation of information provided by practicing attorneys in Litchfield County.
Contract and Pre-Closing Stage
1. Who prepares the real estate contract?
The seller’s attorney. The contract is prepared from a binder done by the real estate agent. A binder may also be prepared by the real estate agent using a Connecticut Association of Realtors form and acts as a final contract. Often a contract is prepared by seller’s attorney, and sent via mail, fax, or e-mail to purchaser’s attorney for comment. When contract is finalized, copies are printed and executed by all parties.
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 upon signing the binder and pay an additional 9% deposit upon signing the formal contract or within two weeks if no formal contract is required. In some cases, the additional deposit will not be made before satisfaction of the building inspection and mortgage contingencies, if any.
3. Who holds the deposit?
The real estate broker or agent or seller’s attorney holds the deposit as an escrow agent.
4. How and when is the deposit released?
The deposit is released from escrow and paid at closing to the seller’s attorney who then cuts a check to seller for purchase price, including the deposit, less closing costs, mortgage payoff(s), etc., including real estate commissions.
5. Is a preliminary or contract search done? By whom?
The practice varies depending on the attorney. If done, it will be done before the client signs the contract in order to identify any title problems.
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.
Real property taxes, rents, security deposits, fuel and condominium common charges – customarily adjusted. Elderly circuit breaker benefits are not customarily adjusted at closing. The tax adjustment is done on the basis of actual bill. Oil adjustments are made on a full or measured tank, dependent on the purchaser’s wishes, and the ability to accurately measure the fuel levels in the tank(s). The adjustment is based on the market price as of the date of closing or the day before closing.
Water and Sewer – New Milford – Where public water service exists, the water meter is read for closing and the seller pays the final bill prior to or at closing. The sewer use tax is billed semi-annually, in November and May, in advance. It is customarily an adjustment from purchaser to the seller on the bill paid.
Other Towns – Water and/or sewer is available in parts of Washington, Litchfield and other towns. Adjustment will vary depending on method of payment. Check with local water company or town tax collector for payment information and procedure upon the transfer of the property.
Per diems for adjustments are figured on a 365-day year. Leap years are not customarily treated differently. Adjustments are calculated using the exact number of days.
The date of closing is most frequently charged to seller.
The following towns have special taxing districts, fire or utility districts, which taxes are also adjusted:
The official in charge of the district should be contacted for billing and payment information.
1. Where is the closing held?
At the office of seller’s attorney unless otherwise requested by purchaser’s lender, then at the office of lender or lender’s attorney.
At the mutual agreement of seller’s attorney and purchaser’s attorney, the closing may be completed without a formal closing, documents being exchanged via mail or overnight delivery service.
2. How are closing expenses and purchase price paid at closing?
The purchaser is expected to bring the balance of the purchase price (net, after adjustments) due at closing in the form of wire transfer, bank check, or certified funds. These funds and the mortgage proceeds check are deposited by purchaser’s attorney, who then issues checks for the seller’s mortgage and lien payoffs and a check to the seller’s attorney for the balance due to seller. All purchaser’s closing costs (recording fees, attorney’s fee, bank fees, etc.) are paid by purchaser’s attorney at closing with trustee checks, wire transfers, bank checks or certified checks as required. Seller’s attorney issues checks for seller’s closing expenses.
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. 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 or prior to the time of closing: a copy of mortgage payoff statement provided by the mortgagee and an undertaking to obtain a release of mortgage.
Seller’s attorney, upon receiving the release of mortgage from the mortgagee, shall send it, with payment for the recording fee, to purchaser’s attorney who shall then record the release of mortgage.
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.
5. Who issues the title insurance policy or policies?
The purchaser’s attorney.
1. Who records the documents?
The purchaser’s attorney.
2. Who is responsible for transmitting payoffs of mortgages, taxes and water and sewer bills due, and real estate commissions?
The seller’s attorney will transmit payments of the mortgages, water and sewer bills due, and real estate commissions. Tax payments which are due will normally be delivered to the tax collector by the purchaser’s attorney at time of recording.
3. Who notifies tax collector/assessor and utilities of change in ownership of property?
The purchaser’s attorney, typically by letter. The lender or lender’s attorney may also notify the tax collector if lender is escrowing for taxes.