Closings are interesting and emotional transactions. As an attorney who has handled many of them, I can tell you that each one is different. From a legal point of view, they are not especially complex. From an emotional point of view, they can bring out the worst in people. Even though most closings go smoothly, tempers can flair at any moment over small issues. The seller is giving up his or her home and the buyer is anxious to move in and create a new home. This can make the parties, to put it mildly, a little "difficult." Knowing this and the particulars involved in a closing can help you seal the deal with fewer problems.
The Phases of a Closing
Closings take about two months from start to finish. There are three main phases for most closings: going to Contract; submitting a board package and obtaining a mortgage; and closing.
After the parties shake hands and agree that they have a deal, they must then sign a contract. The buyer will give his or her attorney’s name to the seller and the two attorneys will begin to discuss the terms of the contract. It is a good idea to have an attorney in mind before you select an apartment so that you will not waste time interviewing one. Often, your broker will be a good source of referrals. When the buyer calls his or her attorney, the general terms will have been worked out already, such as price, approximate closing date and what personal property is included (e.g., curtains, lights, fixtures).
The attorneys then discuss various contract provisions such as representations that any renovation work was done with board approval and filed with the buildings department. Occasionally, tempers flair even at this early stage when the parties discuss the closing date. The buyer will want it to occur quickly after he or she gets a mortgage and the seller may want a time cushion because renovations on their new home will take a while. Usually the closing is "on or about" a date. This allows some leeway if either party needs more time. Occasionally, there is an exact date with "time is of the essence." That means that it must close on that date. The contracts are usually exchanged by mail or hand delivery. There is not a big sit-down signing.
During this period, which only lasts a few days or less, the buyer’s attorney also conducts "due diligence." This is a review of the board’s minutes and resolutions, the offering plan and the financials. The attorney is looking to see if the building is likely to have an assessment or maintenance increase because of capital improvements.