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"The Real Estate Closing Process for Rental Properties"

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The real estate closing process is the finish line for all buy and sell transactions. It is where all legal and property settlement documents are signed, and all monies are exchanged. Once completed, the deed is transferred and the transaction is finalized.


Once you have completed the property assessment and secured the investment financing for the property you are buying, you'll have to contact a title company or real estate attorney to administer the real estate closing.

Sadly, I can't give you a definitive answer on whether to go with an attorney or a title company because the choice will largely depend on your state. Therefore, you should leverage your property agent and his/her experience to guide you.

In my state, there is no need for an attorney because the title company serves the exact same function, and purchase agreements are standardized 90% of the time for 2-4 unit multi family rental properties.

That said, if I ever encounter a non-standard contract, or if the transaction is unique in some other way, then I'd probably get an attorney. However, I have not yet run into any of these unique situations.


Prior to closing the deal, the title company will investigate the quality of the property's deed / title – that is, to make sure there are no liens, or anything else that would hinder its transferability from the seller to you. Once the title is deemed to be "clear," the title company will work with you to schedule a day and time to do the real estate closing.

The title company will also work with your lender to create the mortgage settlement documents - like the HUD-1 - and as such may call the local sewer company or tax collector to determine the appropriate allocation of these costs.

A day or two before your scheduled closing date, the title company will send you the HUD-1 so you can double-check all the numbers and closing costs associated with your mortgage settlement. If any corrections are required, let the title company know so the document can be updated.

Make sure you see any and all revised should never proceed with closing the deal until you "signoff" on the final numbers.


Again, there are a variety of things you'll need to do prior to closing the deal. Obviously the most critical items are the financing & real estate appraisal, building insurance, inspection and title work. Click here for a full checklist of all the items you'll need to ultimately close the deal (note: you'll need Adobe download a copy, click here).

Keep in mind that if the seller has agreed to make repairs based on the home inspection, you will need to follow-up to make sure that these were properly corrected. You as the buyer will usually have the right to walk through the property the day of or before the property settlement just to make sure everything is up to snuff.

Also remember to pay attention to your lender's and/or municipality's requirements – for example, if a CO (Certificate of Occupancy) is required but not granted, your real estate closing will be delayed.

Finally, you'll be required to pay any money owed via bank or certified check, so make sure you secure this beforehand (the title company will tell you the exact amount of the check once the HUD-1 is finalized).


Congratulations – your day of reckoning has arrived!

Your actual real estate closing transaction – when you are "at the table" along with the seller, your agent, and a title company representative / attorney – will usually take 1-2 hours.

Of course, if you did not heed my advice to approve the HUD-1 beforehand, and you do not find errors until you are sitting at the table, then your closing will probably take twice as long to complete because all parties must formally approve all changes.

Assuming the numbers are correct, the title company agent will walk you through all the mortgage settlement documents and direct you to sign where necessary. The seller will sign a couple of documents as well, but the buyer does 80% of the signing.

Finally, make sure you get all the pertinent items from the seller while at the table – the leases, tenant contact info, security deposit info, keys, appliance manuals, and anything else the seller has regarding the property.

Trust me, it'll be much more difficult to obtain these items after the real estate closing has been executed. So, do it now!

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3 Responses to The Real Estate Closing Process for Rental Properties

  1. minatta says:

    Great information on the ins and out of the mortgage closing process. I was wondering if anyone had any tips to accelerate the closing when your lender is dragging its feet? Thanks for the help…

  2. Alan says:

    I would say the best way is simply to constantly badger the mortgage lender (for lack of a better phrase). As they say, the squeeky wheel gets the grease!

  3. Nails says:

    I am also a NJ investor and I am really glad that we can use title companies in lieu of real estate attorneys during closing. It’s much cheaper and easier…I don’t understand why ANY state would require an attorney for this. Crazy.

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