We all have too many friends who leave their offices late in the evening the day before or the day of a closing. They miss time with their kids, cocktail hours, dinner, daylight… and still the closings are delayed. It’s a problem that happens all too often with friends and colleagues working in the banking and real estate industries. Common causes of hold-ups include improperly signed or missing documents or last minute disagreements. And why do we still see 3, 4, or 5 versions of the settlement statement floating through our email in-boxes on the day of closing? All the while, the closing agent and attorneys are spending more time dealing with the last minute hold-ups, adding additional cost. Is this just the nature of the beast or can we improve our processes, close the deal, and still get home for dinner?

 

Although we can’t save every closing, there is a lot that we can do ahead of time to prevent this recurring problem.

  1. Communicate! The majority of these hold-ups occur because of a misunderstanding on a material matter related to the nature of the underlying deal, the documents, or distribution of fees. Sometimes things don’t get done because one party thinks another party has already taken care of it. For example in loan closings with a third party closing agent, the lender needs to communicate whether it will be preparing a separate settlement statement or whether it would prefer that all of the loan fees be tied into the real estate settlement statement. Often, this is not communicated early, leading to confusion and significant last minute revisions to the closing statement.
  2. Start Early. Starting day one, you should be anticipating and agreeing upon the form closing documents, distribution of costs, key dates and inspection items. Don’t wait until a day or two before closing to address the documents or how they will be executed or delivered to the closing agent.
  3. Use a Closing Checklist. The checklist should identify all matters that must be addressed before the closing and who has responsibility for those matters. In a purchase contract, the purchase and sale agreement forms the backbone for the checklist. In a loan closing, the loan commitment plays that role. Compile the checklist early and update it often.
  4. Choose Your Closing Date Carefully. All too often the parties pick a closing date by adding a set amount of days to the end of the inspection period but don’t actually run out the dates in the calendar. Is the closing day scheduled the day before or after a holiday weekend? How about a Friday? Those days are notoriously difficult closing days because there are fewer people in the office, including authorized signatories that might be available to sign a document on last minute notice. And, by all means, don’t schedule it the day of your daughter’s dance recital.
  5. Work with a Good Broker. A good broker doesn’t just initiate the deal but sees it through closing, all for the benefit of their client. This is true for mortgage brokers just as it is for real estate brokers. Excellent brokers take the lead in preparing closing checklists and kick-off calls, keeping communication lines open, running down signatures, and a lot of other preparatory work. This not only moves the deal forward but saves the attorney time and the client money in legal fees. It’s a win-win for all involved.
  6. Check, Check and Double Check Again. Review the executed documents before closing to make sure they’ve been signed and notarized properly. To the extent that you can, have the executed documents emailed to you so that you can review them for form. Verify your wire instructions, where funds will be originated and when they are scheduled to be delivered. Then do it again.
  7. Coffee. A good cup cures all ills. For some, it may be a walk around the block, a call to a friend or a lunchtime workout. Do whatever gets you going, clears your mind, or gives you the boost you need to see it through.