One day in a certain place a real estate closing happened. This story is about what went wrong in that closing, why it matters who closes your purchase, and about who is at risk when a closing goes wrong.
The closing is scheduled for 9:00. At that hour everything is laid out on the table for closing, but a boundary survey has not been received. The property to be conveyed is acreage located at the intersection of two highways.
About 9:30 everyone has signed, the closing agent has finished the closing without the survey that she said had been timely ordered, and she is prepared to give the Seller, the agents, and herself, a check, representing a successful closing, even without the survey. At literally the last minute the survey was presented that looked something like this:
Clearly the property is not “on the road”, and clearly, even though a driveway is shown across property the buyer didn’t own, legal access is not confirmed. If we agree on nothing else, please understand this survey should have caused “legal access” to be discussed at closing.
The Buyer was a foreign national whom everyone knew might not understand all documents, even if he’d had time to study them. Access was never discussed at closing, but the closing concluded, everyone got paid, and the Buyer realized a problem only years later. The Buyer’s title policy had an exception for anything the survey revealed to him.
The Buyer is obviously seriously impacted by lack of legal access. The property can’t be mortgaged or built on without legal access.
Assume you represent this Buyer years after the closing. You call the closing agent, who remembers clearly that she showed the survey to the Buyer, and he initialed it, but she doesn’t remember whether lack of access was talked about, or even noticed. Is this Buyer prevented by the passage of time or by his own negligence from making a claim? Against whom?
This looks exactly like a bar exam question. But this is real life, and someone has just made a serious investment for land that can’t be used.
The purpose of this example is not to provide the answer. There may be several, and there may be none. The purpose is to invite the professionals who might have been in that closing room to decide just whom he or she wants to be. We have limited space for this article, and decent treatment of the subject takes more, but here are some possibilities:
Real estate agents in future closing rooms will confront just this dilemma. Maybe not with a survey, but with a termite inspection, a condition report, or something else. Your future reputation will be affected by the decision you make in that instant. Who will you be? Will you sit quietly by, let the Buyer take his chances, and be grateful that access didn’t come up in the closing? Will you look closely enough to understand what’s happening? Would you even schedule the closing without an assurance that the survey will be presented before closing?
As to the closing agent, the conflicting incentives that push her or him to satisfy the interests of Realtors and parties is assumed. This closing will define you, will you assume this issue is not important enough to threaten your relationships in the room, and say nothing?
I suggest we all start with the following thought: When something like the closing I’ve described comes to light in a courtroom, and it should, everyone will lose.
Every one of us will make honest mistakes, or be confused. When that happens, stop. Don’t take another step without understanding and correcting. You’ll be doing a service to everyone in the room if you do.
A great closing agent is a wonderful asset. She (or he) can be a scowling traffic cop when one is needed, a friend when she can be, never comfortable with even a small mistake, and she will smile through it all.
The lawyers and title companies that have been in business a long time, without claims or lawsuits, have found those special people. Be grateful for who they are.
Mike Chesser
Board Certified Real Estate Attorney
Chesser & Barr, P.A.
1201 Eglin Parkway
Shalimar, FL 32579
# (850) 651-9944
mike@chesserbarr.com
