We Almost Didn’t Close
Believe it or not, the Final Walk Through and the final lien affidavit and agreement nearly derailed a closing this week. I stayed calm and immediately went to work to keep things on track. In the end, it took a little longer than usual, but we muddled through with the Buyer (my client) protected. Let me tell you about the closing that almost didn’t happen.
Final Walk Through
It all started with our final walk through. This is a very important task that too often is overlooked. We went back to take one last look at the house. The final walk through is a good opportunity make certain all is as it should be at the house.
You might be surprised at the horror stories I have heard – usually from agents that discovered a problem after the closing, when the seller is no longer liable and the title company is not financially responsible.
I knew we had an issue when I opened the door and saw the world’s largest extension cord running across the floor. As part of the inspection, the seller had repaired the sump pump in the basement. We were told the repair had been completed, so there should not have been any equipment in the house.
Final Lien Affidavit Purposefully Excludes This Situation
The immediate dilemma for my clients was all the work and materials inside the home. The Final Lien Affidavit and Agreement which we sign at closing exempts the title company from liability for any repairs or debts incurred by the seller or buyer just prior to closing. In the event the seller were to leave the bill unpaid for all this work – the buyers become liable.
What We Could Not Believe
In the basement we discovered a large volume of drying gear and one of the biggest power strips I’ve ever seen. Immediately, I realized this sort of work could create a mechanic’s lien. At closing, we always sign the final lien affidavit and agreement – a document that states no work has been done that might require paying. Seeing that the work was being done and the equipment was actually in the basement raised a red flag. Were we to close without addressing the underlying issue, my clients could be liable for the repair and the equipment. Or we could find our loan jeopardized.
What Would You Do?
As you ponder the situation, my first reaction was to call the listing agent and inform her of the situation. These things happen and I wanted all hands on deck to resolve the issue. The listing agent initially suggested we keep this quiet, that the seller is a Man of his word and will pay the bill. But this is too much risk for my client.
Next up, I contacted the lender – better to tell the mortgage lender what to expect than have him hear it from his processor. I also contacted the title company where the closing would be so we could begin changing the HUD. Finally, I grabbed a camera and snapped several photos so we would have a record.
All’s Well That Ends Well
As it turned out, all the work was completed, the equipment merely needed to be picked up. The contractor agreed to pick up the drying gear and the title company placed 150% of the cost of the repair work in escrow. The mortgage lender agreed to the HUD change and then re-approved the final figures. The buyers signed a zillion documents including the Final Lien Affidavit and Agreement in good faith. The transaction closed and the buyer is 100% protected by the title insurance policy. And I have a good story to tell.