Execution to Settlement
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Ratified – So, now what?
Once you have a ratified contract, the intensity of the process increases a little, usually for a few days at most. There will likely be contingencies to the contract. These are items that must be addressed and then removed as blocks to the completion of the purchase process. Most are in place to allow you as a buyer to ensure that you have the ability to complete due diligence on the property before you bring the money to the settlement or closing table. The period during which these activities are executed is understandably referred to as the “executory period”.
Is it what it seems…
During the executory period, the buyer has the opportunity to see if the property is “as advertised” so to speak. These contingencies usually have a limit to the time in which the buyer or seller must remove or waive them. Generally, the time is measured from the “ratification date”, written about in the previous section. There can be all manner of contract contingencies. Most will be determined on a transaction by transaction basis with your agent or broker. However, in practically every situation it is advisable for the buyer to require a home inspection to ensure that the major systems of the property are working in a way that is acceptable to them and, as outlined in wording of the contract. If there is financing that must be obtained, there is usually a deadline for completing that process. This is where you go to a lender and get full-approval, including an appraisal of the property, and a actual “loan commitment”.
You bring the money, and I’ll bring the deed…
Essentially, a settlement or closing boils down to simply those words. If the parties’ representatives have written the contract clearly, the lender has done his/her job, and the contingencies have been dealt with professionally during the executory period, the closing is little more than the formality of final signatures. If there are any outstanding issues, with reasonable buyers and sellers, professional representatives of the parties can usually resolve them at the table within a very short time.