Real Estate Closings in North Carolina - Process Overview

Homebuying steps from contract to closing

  • By Janet Wickell

Updated February 18, 2018

Real estate transactions vary across the United States, so there's no one list of "typical" steps that can be used to prepare buyers and sellers for the progression from contract to closing. Below is a look at closings in North Carolina. Generally, attorneys do title searches and acquire title insurance for North Carolina homebuyers, but some closing steps vary among North Carolina jurisdictions.

Offer to Purchase Contract

The majority of residential sales contracts are presented to sellers by real estate agents who use the standard forms provided by the North Carolina Association of Realtors.

These "fill in the blanks" forms were developed by attorneys and comply with state laws. Homebuyers sometimes ask their attorneys to draft offers for them.

Home Inspections, Contingencies

Home inspections normally take place after the contract is accepted by all parties. Inspections are typically paid for by the buyer.

  • Contingencies for basic home inspections and pest inspections are part of the main body of the contract. Dates are inserted to indicate when buyers will complete inspections and when requests for repairs, if any, will be sent to the seller.
  • Contract contingencies for some types of inspections, such as those for septic systems and radon levels, are added by including a special addendum with the offer. The same is true for many other contingencies, such as appraisal requirements, buyer possession before closing, and seller-financing.
  • Other standard contingencies include financing provisions, a description of items to remain in the home (or to be removed), and clarification of association dues.

    Residential Property Disclosure

    North Carolina law requires that most sellers furnish a residential property disclosure that describes the condition of all systems in the home.

    Boundary Surveys

    Buyers in some regions, especially rural areas, usually pay for surveys, but sometimes ask the seller to share in the cost.

    Most local lenders do not require surveys.

    Closing Highlights

    • Attorneys do title searches, acquire title insurance for buyers, and handle the closing transaction.
    • Attorneys and real estate agents work with lenders to coordinate the closing, making sure everything is handled on time.
    • Attorneys prepare deeds for sellers.
    • Buyers and sellers hire their attorneys of choice. Homebuyers and sellers should work with different attorneys so that each party has representation should a problem requiring negotiation arise.

    Typical Homebuyer Expenses

    • Home inspections, almost always.
    • Surveys, which can be expensive.
    • A share of yearly property taxes, property association dues, and other similar fees prorated to the closing date.
    • Attorney fees for a title search.
    • Fees for title insurance policies, hazard insurance for a year, down payment and lender fees, flood zone certification fees.
    • Fee to record the new deed.
    • Funds to open lender escrow accounts for property taxes and insurance that will be paid by lender the following year.

    Typical Seller Expenses

    • Attorney fee for deed preparation.
    • Tax stamps, an excise tax based on sales price.
    • Prorated share of: property taxes, property association dues, other similar fees.
    • Real estate commission if a broker is involved.
    • Fees associated with loan payoff or transferring funds into a checking account.
    • Any costs seller agrees to share with the buyer.

    Step-by-Step Path to Closing

    1. Buyer makes offer.
    2. Real estate agents facilitate any negotiations.
    3. Seller accepts the offer or issues a counter to the buyer, which is generally then accepted.
    4. Buyer's earnest money, also known as the good-faith deposit, is placed in the listing broker's escrow account.
    5. Lender orders appraisal.
    6. Inspections are ordered after an acceptable appraisal is received.
    7. Any repair requests are negotiated with the seller, but sellers do not need to comply.
    8. Termite inspection is ordered -- must be within 30 days of closing.
    9. Surveys are ordered after a successful appraisal and inspections -- buyers don't want to invest too much into the property until they are sure it's a go and will close.


    Why You Need a Lawyer When You Buy or Sell a House


    Buying a home will probably be the largest and most significant purchase you will make in your life. It also involves the law of real property, which is unique and raises special issues of practice, and problems not present in other transactions. A real estate lawyer is trained to deal with these problems and has the most experience to deal with them.

    Buying a Home

    In the typical home purchase, the seller enters into a brokerage contract with a real estate agent, usually in writing. When the broker finds a potential buyer, negotiations are conducted through the broker, who most often acts as an intermediary. Once an informal agreement is reached, buyer and seller enter into a formal written contract for the sale, the purchase agreement. The buyer then obtains a commitment for financing. Title is searched to satisfy the lender and the buyer. Finally, the property is transferred from the seller to the buyer, and the seller receives the purchase price bargained for in the contract. This seems simple, but without a lawyer, the consequences may be more disastrous than purchasing a car that turns out to be a lemon, or a stock investment that was unwise.

    Avoid Vague or Unclear Terms

    A lawyer can help you avoid some common problems with a home purchase or sale. For example, a seller may sign a brokerage agreement that does not deal with a number of legal problems. This happens quite often; realtors often use standard forms, expecting that they will cover all circumstances or will be easily customizable for unusual circumstances.

    In the absence of an agreement to the contrary, the seller may become liable to pay a brokerage commission even if a sale does not occur, or to pay more than one brokerage commission. If the agreement allows the seller the right to negotiate on his or her own behalf, for example, you may avoid this problem. A lawyer can explain the effect of multiple listings. He or she can negotiate the realtor's rights if the seller withdraws the property from the market, or can't deliver good marketable title.

    The seller should have the advice and guidance of an attorney with respect to a brokerage agreement. Even if the agreement is a standard form, its terms should be explained to the seller and revised, if necessary. An attorney should also determine if the agreement was properly signed.

    Consider a Consultation

    Even if a lawyer is not needed during the course of negotiations, the buyer and seller each may have to consult with a lawyer to answer important questions, such as the tax consequences of the transaction. To a seller, the tax consequences may be of critical importance. For example, the income tax consequences of a sale, particularly if the seller makes a large profit, may be considerable. An attorney can advise whether the seller can take advantage of tax provisions allowing for exclusion of capital gains in certain circumstances.

    Purchase Agreements

    The purchase agreement is the single most important document in the transaction. Although standard printed forms are useful, a lawyer is helpful in explaining the form and making changes and additions to reflect the buyer's and the seller's desires. There are many issues that may need to be addressed in the purchase agreement; below are some common examples:

    • If the property has been altered or there has been an addition to the property, was it done lawfully?
    • If the buyer has plans to change the property, may what is planned for the property be done lawfully?
    • What happens if a buyer has an engineer or architect inspect the property and termites, asbestos, radon, or lead-based paint is found?
    • What if the property is found to contain hazardous waste?
    • What are the legal consequences if the closing does not take place, and what happens to the down payment? This question raises related questions: Will the down payment be held in escrow by a lawyer in accordance with appropriately worded escrow instructions? How is payment to be made? Is the closing appropriately conditioned upon the buyer obtaining financing?

    Most buyers finance a substantial portion of the purchase price for a home with a mortgage loan from a lending institution. The purchase agreement should contain a carefully worded provision that it is subject to the buyer's obtaining a commitment for financing.

    Title Search

    After the purchase agreement is signed, it is necessary to establish the state of the seller's title to the property to the buyer's - and the finance institution's - satisfaction. Generally, a title search is ordered from an abstract or title insurance company. In some states, and in outlying areas of others, title insurance is not typical. In such cases an attorney is essential to review the status of title and render an opinion of title in lieu of a title policy.

    Assuming you are in an area where title insurance is customary, an attorney can help review the title search and explain the title exceptions as to what is not insured, and determine whether the legal description is correct and whether there are problems with adjoining owners or prior owners. He or she can also explain the effect of easements and agreements or restrictions imposed by a prior owner, and whether there are any legal restrictions which will impair your ability to sell the property.

    The title search does not tell the buyer or seller anything about existing and prospective zoning. A lawyer can explain whether zoning prohibits a two-family home, or whether planned improvements violate zoning ordinances.

    The Closing

    The closing is the most important event in the purchase and sale transaction. The deed and other closing papers must be prepared. Title passes from seller to buyer, who pays the balance of the purchase price. Frequently, this balance is paid in part from the proceeds of a mortgage loan. A closing statement should be prepared prior to the closing indicating the debits and credits to the buyer and seller. An attorney is helpful in explaining the nature, amount, and fairness of closing costs. The deed and mortgage instruments are signed, and an attorney can be assure that these documents are appropriately executed and explained to the various parties.

    The closing process can be confusing and complex to the buyer and seller. Those present at the closing often include the buyer and seller, their respective attorneys, the title closer (representative of the title company), an attorney for any lending institution, and the real estate broker. There may also be last minute disputes about delivering possession and personal property or the adjustment of various costs, such as fuel and taxes. If you are the only person there without a lawyer, your rights may be at risk.

    Get a Free Initial Case Assessment

    A broker generally serves the seller, and the lender is obtained by the buyer. Both want to see the deal go through, since that is how they will get paid. Neither can provide legal counsel. Contact a local attorney for a free initial case assessment to insure that you have someone in your corner during this important and complex process.