Also known as:real estate closings · closing · settlement · property closing
Written by attorneys · grounded in primary & secondary sources — see below
The final stage of a real estate transaction in which the buyer and seller exchange documents, the seller conveys marketable title to the property, and the purchase price is disbursed to complete the transfer.
Sources & Authorities
How it applies
Common Examples
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Unmarketable Title Halts Closing
Roger Ramirez contracted to buy a parcel from Ralph Richardson. At the scheduled closing the title search revealed an unreleased lien from a prior judgment against Richardson. Ramirez refused to proceed with payment or accept the deed because the lien created reasonable doubt that a prudent purchaser would accept the title.
Contingent Fee Agreement Signed Before Closing
Rina Rahman retained counsel to handle the purchase of commercial property from Royal Crest Hotels. The parties executed a signed writing stating that counsel would receive fifteen percent of any reduction in the purchase price achieved before closing, with expenses deducted after the contingent fee was calculated. The agreement also notified Rahman that she remained responsible for expenses regardless of outcome.
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Cases
Statutes
Federal Rules
Uniform Acts
Model Codes
Common Law
Survivorship Defeats Will Devise at Closing
Ricardo Rojas and his spouse held their residence as tenants by the entirety. After filing for divorce Rojas executed a will devising his interest to a third party. When Rojas died before closing on any sale the property passed by operation of law to the surviving spouse rather than under the will.
Derivative Recovery Belongs to LLC Seller
Riverstone Manufacturing, an LLC, contracted to sell its factory to Radiance Media. A member brought a derivative suit alleging mismanagement that reduced the property value. The court ordered that any judgment or settlement proceeds belong to the LLC and not the individual plaintiff.
Separation Agreement Governs Property Transfer
Regina Robinson and her spouse executed a written separation agreement that disposed of their jointly owned residence and provided for its sale at closing. The agreement allocated proceeds and maintenance obligations between the parties and was incorporated into the final divorce decree before the deed was delivered.
Probate Closing Statement Confirms Distribution
Renata Russo served as personal representative of an estate that included a residence sold at closing. After paying all claims, taxes, and expenses she filed a statement confirming that the remaining assets had been distributed to the entitled heirs and that no undischarged claims remained.
Common questions
Frequently Asked
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What standard of title must a seller deliver at closing?+
A seller must deliver marketable title free from reasonable doubt that a prudent purchaser with full knowledge would accept. Recorded liens, gaps in the chain, or adverse claims render title unmarketable and permit the buyer to refuse performance or seek rescission.
Supporting sources
When does risk of loss pass to the buyer before closing?+
Under the doctrine of equitable conversion risk of loss passes to the buyer upon formation of a binding contract in most jurisdictions. The buyer must still pay the full price even if the property is destroyed before the deed is delivered.
Supporting sources
What happens to contract terms after the buyer accepts the deed?+
The doctrine of merger provides that the contract merges into the deed at closing. Promises not embodied in the deed are discharged unless they involve fraud, mutual mistake, or collateral obligations.
Supporting sources
May parties agree to insurable title instead of marketable title?+
Yes. Some contracts require only insurable title, meaning a reputable title insurer will insure the title at standard rates. This standard can be less strict than full marketability.
Supporting sources
494 U.S. 872, 110 S. Ct. 1595, 108 L. Ed. 2d 876 (1990)Constitutional Law
…no other children may do.” Id. , at 171. In Braunfeld v. Brown , 366 U. S. 599 (1961) (plurality opinion), we upheld Sunday-closing laws against the claim that they burdened the religious practices of persons whose religions compelled them to refrain from work on other days. In Gillette v. United States , 401 U. S.…