For the typical residential closing there are generally five participants; seller, seller’s agent, buyer, buyer’s agent, and the closing agent. Sometimes a representative for the lender will attend as well. Who participates in a commercial real estate closing will vary based on the transaction. Due to the nature of commercial transactions participants are almost always represented by an attorney.
Both buyers and sellers rely on their real estate agents to navigate them through the purchase or sale process. And, although they usually attend the closing with their respective client, they legally can’t answer questions about the documents or the language in the documents presented at closing, nor can they advise on a whole swath of issues that could come up at the closing table.
Similarly, the closing agent cannot provide legal advice or opinions about the closing documents. The title/closing agent provides the title policy and prepares the closing documents and conducts the closing ceremony.
If a loan is being used to purchase the property then the lender prepares a closing package that includes the closing instructions; as-well-as, the deed.
If you are paying cash for the property, the seller’s attorney would prepare the deed and other necessary documents, who then sends them to the closing agent for execution at settlement.
In either case, the non-attorney, settlement agent cannot explain the terms, review the documents, provide an opinion about the title abstract and commitment, prepare an addendum, or provide any recommendations. Only an attorney can do those things.
Purchasing real estate is an expensive proposition that can have legal consequences. Selling real estate can expose the seller to legal liability. If you do not fully understand the closing documents and the documents you are signing, there could be severe consequences for both the buyer and the seller.
As the buyer you could get stuck with a defective title, inadequate insurance, or irregular mortgage terms. You could get stuck with extensive repair bills due to an undeclared addition that was not properly permitted, undeclared problems with the property, or easement issues. There are a whole host of other issues that could occur.
As a seller, without adequate representation, there is always a possibility that there are grounds for a lawsuit for misrepresentation or breach of contract. Moreover, you are still responsible for accrued interest, late fees, and penalties if the seller’s mortgage or liens are not paid-off in a timely manner after the closing. What if you are selling just one lot of a multi-lot property? You’ll want to make sure you’re not selling more than intended, or the wrong lot.