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Closing Documents for Buyers and Sellers: 2023 Ultimate Checklist

Last updated 03/03/2023 by

Benjamin Locke

Edited by

Fact checked by

Summary:
Both buyers and sellers must bring certain documents in order to close a real estate transaction, including the property deed, closing disclosure, and certificate of title. Furthermore, if the buyer has a loan, then the lender must also provide supplemental documentation. If you don’t have all the required documents in order, don’t panic. You can make a checklist of needed items and work with your real estate agent and lender to track them all down.
Buying or selling a home can create an adrenaline rush like no other. Whether you are a property investor hoping to turn a profit or a married couple wanting to buy your first home and start a family, real estate transactions can conjure up incredible feelings. However, in order to ride this high, you need to make sure the deal actually goes through. Thus, you need to fully understand the documentation required to close the deal. Think of this checklist as a security blanket, ensuring there are no hiccups when it comes time to close on a property.

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Checklist of documents for buyers and sellers

There are typically three parties directly involved in buying or selling a home: the seller, the buyer, and the lender. Each one has different considerations when deciding what type of documentation to bring.
  • The seller needs to bring documents related to his or her ownership of the property, such as the deed, sworn affidavit, a mortgage loan payoff agreement, and tax declarations.
  • The buyer needs to provide a closing disclosure, escrow account information (proof of funds), and proof of homeowners insurance.
  • The lender will provide certain documents to the buyer, such as the loan application, loan estimate, and mortgage note.
Below is a checklist of the required documents and who provides each one.
Buyer bringsBuyer brings/lender providesSeller brings
Proof of funds and escrow statementClosing disclosureContract & transfer documents
Proof of homeowners insurance/flood insuranceLoan estimateSeller’s affidavit
Mortgage applicationDeed
Mortgage noteCertificate of title & title insurance
Mortgage loan payoff agreement
Bill of sale
Tax declaration

Closing documents that buyers bring

Now let’s go into more detail about each document that the buyer needs to provide.

Proof of funds and escrow account statement

The buyer needs to prove that they have the funds available to finance the purchase of the property, apart from the amount they borrow from a lender. This money sits with a title company or escrow company so the buyer needs to provide the relevant escrow account details.

Proof of homeowners insurance, flood insurance, etc.

Some lenders will want to see proof of homeowner’s insurance before the buyer can officially close the transaction and release funds. Furthermore, depending on the state and locality where you buy a home, there could be a flood insurance disclosure required to prove that you purchased flood insurance.

Pro Tip

Sometimes, either the buyer or seller will not be able to be present for the closing. “In this case, they should appoint a power of attorney to act on their behalf,” says Benjamin Ivory, a real estate attorney in Chicago. “If documents need to be collected, they should also utilize a POA to collect documents to do the closing.”

Documents that lenders provide to buyers

Buyers need to bring some documents themselves, but lenders will also need to provide buyers with documents related to the loan. If the buyer paid cash, they wouldn’t need to worry about these documents. However, anyone purchasing property with a mortgage will need to bring the following documents at closing.

Closing disclosure

A closing disclosure is a summary provided by a lender to explain details about the home loan, such as the loan terms and projected monthly payments. A closing disclosure will list all of the various closing costs as well as a complete summary of the loan.

Loan estimate

A loan estimate will give you an idea of the loan amount, interest rate, and monthly payments. It will also utilize your property appraisal and explain how that influences your loan-to-value ratio. Furthermore, it will break down each piece that goes into your monthly estimated payment.

Mortgage application

When you applied to get your loan, you most likely filled out a mortgage application. You will need to bring this to the property closing. This can be particularly applicable if something related to your assets and liabilities or income and expenses has changed. In that case, you might be required to add more details and sign it again.
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Mortgage note

The mortgage note is the official promissory note that stipulates how much you borrowed from the bank and that you agree to pay them back. This is the official documentation that banks use when they close a mortgage.

Pro Tip

Mortgage notes are also considered “asset-backed securities.” That means that they can be traded like other securities, with the home being the “asset” backing it up. If the buyer holds the note, then the person to whom they owe money can change if that security gets sold. Buying and selling mortgage notes was the main catalyst of the 2008 financial crisis.

Documents that sellers need to bring

Buyers want to make sure that the seller has all the documentation needed to prove that he or she owns the home free and clear. Thus, the seller of the home will need to bring the following documents.

Contract, additional transfer forms

When buying or selling a home, a general sales and purchase contract or general property transfer forms are required. Depending on the state where you live, the requirements are different. However, one of these should prove that there is an agreed-upon price and asset transfer and should be signed by both the buyers and sellers.

Seller’s affidavit

A seller’s affidavit is a sworn statement stipulating that the seller owns the property. It also explains that the property is “free and clear” to the best of the seller’s knowledge and has no liens or undiscussed issues. This is implemented to protect the buyer in a legal situation should one come up in the future.

Deed

The deed is the official document that transfers home ownership from the seller to the buyer. It’s proof that a real estate transaction did take place and that there is now a new legal owner of the property. The deed will have information about the property, as well as information about the new owner. The seller must sign the deed to transfer it to the buyer.

Certificate of title and title insurance

A certificate of title is a document usually given by a state or municipality dictating who owns a property and stating any legal encumbrances. Although it’s not as important as the deed, the seller should bring it along anyway in case there are any further questions related to the status of the property. Title insurance is another legal document that can act as a certificate of title as well.

Mortgage loan payoff agreement

Sometimes, the seller of the home already has a mortgage on it. In that case, that loan needs to be repaid once the property is sold. This could cause issues in the future if the seller’s lender isn’t paid back. To avoid any issues with the seller’s lender, a mortgage loan payoff agreement is helpful. It states that there is already a signed agreement with the lender to pay off the loan.

Bill of sale (personal property)

Often, when people buy a home, the seller might agree to transfer certain items (like a jacuzzi) for free and incorporate them into the overall purchase price. However, there might be a situation in which the seller wants to transact personal property separately. For example, if the seller had a bunch of Hawaiian shirts that the buyer loved when viewing the property, he could sell those to him separately.

Tax declaration

The buyer needs to be sure that the seller has been paying the requisite property taxes before closing day. Thus, the seller should bring a signed tax declaration form stating what taxes were due on the property and how/when they were paid.

“I don’t have all the documents, and I’m freaking out!”

If you don’t have all of the necessary documents, don’t panic. The best course of action is as follows:
  1. Make a list (perhaps in Excel) with all of the documents you have, as well as the missing documents.
  2. Find out where to get any missing documents. Is it a municipality, the title company, or your lender?
  3. Once you have your list of missing documents and know where to get them, start tracking them down.
  4. Check that you are still okay to close with your lender, real estate agent, and title company, even if you are missing one or two documents.

FAQ

What is the most important document at closing?

All documents are important. However, the sellers should most definitely bring the deed and certificate of title, and the buyers need to bring proof of funds and their loan terms. Some would say that the actual sales and purchase contract of the property should be the No. 1 priority for both parties.

What is a closing checklist?

A closing checklist is a list of documents that you should bring when closing a real estate transaction. The buyer, seller, and lender will each need to bring different documents related to the ownership of the property and the terms of the home loan.

How do you do a closing checklist?

You can use our table to determine which items you need to bring, depending on whether you are a buyer or seller. If you are a buyer getting a mortgage, your mortgage broker will probably also provide you with a checklist of items that you will need to complete.

Key takeaways

  • Both the sellers and buyers in a real estate transaction must bring certain documentation when buying or selling a home.
  • The seller needs to prove they own the home without any encumbrances or debt related to the property, as well as information regarding proper tax filing.
  • The buyer needs to bring documentation that proves they have the money to buy the home, as well as any mortgage-related documents if they are buying with a loan.
  • Although it can seem stressful, most documents are relatively easy to get from the relevant parties. If you don’t have the documents on hand, start making a list and checking documents off one by one.

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