Rules for real estate closings vary from state to state

It’s my own fault. I’m breaking the rule I made maybe 40 years ago that says to stay away from items about real estate closings. The settlement procedures in which sellers finally turn over ownership to buyers vary widely from one area to another.

A real estate lawyer in Honolulu once told me that when he gets a phone call asking whether he’d represent a buyer at closing, his response is that he would hardly know how and: “You must be from New York!”

Then again, even local procedures have been changing. I never should have used that question in the column.

Behind the times

Q: As a paralegal who works on real estate closings, I’m always interested to see the questions you receive and your helpful, plain-language answers. I have a small quibble with a recent column, however. In it, you advise the buyer to bring to closing a certified check made payable to himself or herself, and then endorse it to the seller.

This is indeed how we used to handle the transfer of funds at closing. However, a few years ago, the banks in our area — apparently due to some change in regulations — stopped being willing to cash such endorsed-over or third-party checks unless both the original payee and the new payee were present at the bank. In other words, both buyer and seller would have to go together to the seller’s bank after the closing, present ID and perform the endorsement in front of the teller, which obviously could be extremely cumbersome.

Nowadays, in our area, the buyers deposit the closing funds into either their attorney’s or lender’s escrow account in advance, and the closing checks are written from there. Alternatively, the buyer brings a cashier’s check payable to the seller in the exact amount needed — which is calculated by the lender and the parties’ attorneys at least three days before the closing.

Just thought you might want to know of this wrinkle. — A.M.

A: Thanks for reminding me.

Here is someone from a different location correcting me with entirely different Information:

Another settlement error

Q: I have a comment on your recent article on closings. A first-time buyer had questions, and you advised to have the certified check or money order made out to himself and endorse it over at the closing. I work for an attorney, and in my area, title companies will now only accept checks made out to the title company.

With technology, people can deposit checks by taking pictures of them. Apparently, some people deposited the check made out to themselves back into their account, so when the title company went to cash it, it was no longer good!

Also, if the amount to be brought to the closing is $50,000 or greater, the funds must be wired to the title company. (I don’t know if that is a state law or a federal law.) Just wanted to let you know. — C. R.

A: Thanks for the information.

And here’s a reader commenting on a different column question:

Using a relative

Q: I think those people whose nephew has just gotten his real estate license should stick with the Realtor who has been doing a good job marketing their home. Their nephew has no experience and is probably still way down in the learning curve. They’d take a step backward in their efforts to sell their current house and buy a smaller one.

Plus — and to me this is the biggest thing — it is probably not good business to have this kind of relationship with a family member. The same logic applies to a neighbor or close friend. This kind of contractual relationship needs to be at arm’s length. People I’ve known who used a Realtor who was a friend, family member or neighbor almost to a man regretted it. — J. P.

A: Well, yes, my advice was to stay with the broker who has already invested time and effort and given them excellent service. An experienced broker can often provide the best service, but sometimes a well-supervised beginner with no other clients will work extra-hard to find the right buyer.

Contact Edith Lank at www.askedith.com, at edithlank@aol.com or at 240 Hemingway Drive, Rochester NY 14620.

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