When it comes to buying or selling property, the contract closing date is a crucial element in the process. It is the date when the buyer and the seller finalize the transaction, and the property changes hands. But what exactly does the contract closing date entail? In this article, we will look at what the contract closing date is, and what happens on that day.
What is a contract closing date?
A contract closing date is the date specified in the purchase agreement when the buyer and the seller of a property complete the transaction. This date is usually set by mutual agreement between both parties and is included in the purchase agreement or the sales contract. The contract closing date is also sometimes referred to as the settlement date.
On the contract closing date, the buyer completes the payment of the property purchase price, and the seller transfers the property title to the buyer. The buyer takes possession of the property, and the seller receives the payment for the purchase.
What happens on the contract closing date?
On the contract closing date, several key events take place, including:
1. Walkthrough inspection: The buyer does a final inspection of the property to ensure it is in the condition specified in the purchase agreement. Any issues discovered during the inspection may require the seller to make repairs or offer compensation before closing.
2. Transfer of funds: The buyer pays the final amount of the purchase price to the seller, including closing costs and any other fees. This payment is made via wire transfer or a cashier`s check.
3. Signing of documents: Both the buyer and the seller sign all the necessary documents, including the deed, the mortgage, and the title transfer. The buyer will also sign the mortgage promissory note and other loan documents if the property is being financed.
4. Title transfer: The title is transferred from the seller to the buyer. This transfer is recorded in the county land records office, and the buyer becomes the legal owner of the property.
5. Possession of the property: The buyer takes possession of the property.
Why is the contract closing date important?
The contract closing date is essential because it sets a deadline for both parties to complete the transaction. If the transaction is not completed on or before the contract closing date, it may result in financial penalties and legal consequences.
For the buyer, missing the contract closing date can result in a loss of earnest money deposit and breach of contract. For the seller, missing the contract closing date can result in a breach of contract and legal action taken by the buyer.
In conclusion, the contract closing date is a crucial aspect of any property transaction. It is the date when the buyer and the seller finalize the transaction, and the property changes hands. Understanding the contract closing date and what happens on that day is essential for both parties to have a smooth and successful transaction.