Published in the Firelands Farmer on Monday, December 16, 2013
By: Mark Coriell
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Most farmers will deal with a real estate purchase or sale at some point during the course of a career. It’s even fairly common for neighboring landowners to work out an arrangement to sell property on a handshake basis. However, in order to get the property transferred, some additional steps have to be taken. What do those steps look like?
- The first step is always to sign a real estate purchase agreement. Depending upon the facts and circumstances surrounding the sale, this could be a really simple or really complex document. In any event, this is the document that explains what is being transferred, the amount of the purchase price, which party pays for closing costs and other issues agreed among the parties.
- Once the purchase agreement is signed, assuming the purchaser is borrowing money to finance the purchase, the purchaser will take the purchase agreement to the bank so the bank can make its final decision regarding its willingness to finance the sale and use the property as collateral.
- Provided the bank makes a commitment to loan money to finance the deal, the contract goes to the local title company. In our area, it’s common for the title company to also act as the escrow service that handles the money exchanged between the parties. In addition to handling the money, the title company will also examine the real estate record and report any conditions in the real estate record that might be problematic or in need of resolution. The title company will then typically issue a title insurance policy to cover any title defects that weren’t discovered during the search.
- Prior to closing, any issues discovered by the title company that will be problematic for the purchaser or his bank should be resolved to the satisfaction of all parties. Also, if a particular farm needs survey work done or new legal descriptions, all those steps must be taken before closing.
- Finally, the transaction is set to close, the title company exchanges money, records the deed of conveyance with the local county recorder, and the transaction is finished.
Certainly, this is an oversimplification of the process, but it’s a general outline to keep in mind the next time you’re confronted with the opportunity to buy or sell real estate.
Mark Coriell is an attorney at Laycock & Coriell in Norwalk. This article is intended as general information only and may not be construed as legal advice.