Posted By Larry Tolchinsky on April 14, 2015
At the closing table for the purchase of a home or condo here in South Florida, buyers, both native to Florida as well as those who have recently moved here, or out of state residents purchasing a vacation home, will have lots of paperwork to sign.
Buyers are often surprised at how much they have to review and sign at the Florida closing on their new purchase — even a cash transaction, which is normally the simplest and smoothest residential real estate closing, can take some time.
Why? There are lots of documents (i.e. Mortgage, Note, Flood Notice, Insurance Notice, TILA Notice, Same Name Affidavit, IRS Forms, Real Estate Disclosure, etc.) that the buyer must read, and then initial on many pages, and sign in several spots. For many of these documents, a notary will be needed to witness their signature. A single contract with one signature at the bottom of the last page, no matter how things appear on television, will not consummate the transaction and/or convey the property to the buyer.
Why so many documents? Both federal laws and regulations (for example, RESPA and TILA), as well as state statutes, require the buyer to confirm in writing his or her understanding and agreement (or waiver) of issues and conditions as they take on the expense of a home loan (i.e mortgage). These laws and regulations are designed to disclose as much as possible to the homeowner about the loan transaction they are entering into at the closing. After all, providing as much information as possible about the largest transaction that most consumers will engage in is a good thing.
What Are Some Common Buyer Documents at a Residential Real Estate Closing?
This legal document is normally a standardized form created by the lender which your real estate attorney (if you have one) will have reviewed on your behalf. It is the document where you promise to repay the bank the money you borrowed. Once the buyer’s signature is on the promissory note, he or she has agreed to repay the amount shown in the loan and if he or she fails to pay, this document will be used as evidence of amount due.
This is a legal document that is also a standardized form which you give to the bank and it creates a lien against your property. It provides security to the bank in the event that you, as the buyer, stop paying on the home loan. This document, once signed by the buyer, gives the lender a lien against the real estate and a legal right to take the real estate in foreclosure if there is a default.
This is a form that is required under federal law. It is provided to the buyer so that he or she is given formal, written notice at closing of the details (costs and expenses) associated with their mortgage home loan. The HUD statement tells the buyer things like:
- Expenses related to the loan (i.e. documentary stamps and intangible taxes paid to the county and the state)
- Interest rate calculation and prorations
- Costs of closing
- Fees to be paid by the buyer at closing to other vendors (i.e. real estate agent transaction fee, survey expense, lien search, title insurance premiums, etc.)
Truth in Lending Disclosure Statement
This document discloses to the buyer important information about the loan terms. The Truth in Lending document (a/k/a “TILA”), will set forth things like, the amount financed, the interest rate on the note, the amount of interest paid over the life of the loan, the amount of the monthly principal and interest payments, prepayment penalty information, information related to late fees and whether or not the loan may be assigned, among other things.
If there have been any changes to your mortgage terms since you applied for your home loan (the lender will provide a good faith estimate in advance of the closing setting forth the loan terms), then the lender must formally inform you of those changes at closing. This notice is given to the buyer from the lender showing any difference in the loan terms between application and signing the loan documents at closing.
Affidavits and Declarations
The buyer may also have to sign, in front of a notary public, several affidavits dealing with various issues concerning the purchase of the new home or condo. Affidavits are legal documents where the Buyer swears to the truthfulness of the information contained therein. The affirmations will vary depending upon the property and the buyer. For instance, there may be a Affidavit requiring the buyer to disclose that he or she is known by several alias or that he or she understands that there will be fees and dues assessed by a condominium association which the buyer will be responsible for paying as part of his or her duties as the property owner, or that the condo is intended to be an age-specific (55+) community.
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at email@example.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.