Closings
Closing a house comes with its own vocabulary, and most of it goes unexplained until the moment it matters. Here is what the words mean, in plain English, from the attorneys who use them every day.
In Georgia, closing a real estate transaction is the practice of law, and a licensed attorney must conduct it. That is not true in most states, and it is the reason a law firm rather than a title company handles your closing here. Your closing attorney examines title to the property, prepares the closing documents, conducts the closing, collects and disburses the funds, and records the deed and security deed with the county.
Georgia's good funds law, O.C.G.A. 44-14-13, controls how money reaches the closing table. Any amount over $5,000 due from a buyer must arrive by wire transfer; ACH transfers and checks of any kind are not accepted at that level. For amounts of $5,000 or less, our policy is certified funds only — a cashier's check or a certified check — and we never accept personal checks. The rule exists because the closing attorney has to disburse the same day, and only funds that have actually cleared can be paid out.
The completion of the transaction: documents signed, funds collected and disbursed, deed recorded, keys handed over.
The five-page form your lender provides on a residential mortgage loan, setting out the loan terms, your projected monthly payment, and every cost of the transaction. Federal rules require you to receive it at least three business days before closing, so read it when it arrives rather than at the table. Since 2015 it has replaced the older HUD-1 on most consumer mortgages. Cash purchases and commercial deals use a settlement statement instead.
The agreement in which the buyer agrees to purchase and the seller agrees to sell. It governs everything that follows: the price, the earnest money, how closing costs are divided, the closing date, the inspection and financing contingencies, and any repairs to be completed beforehand. When a question comes up during your closing, the contract usually answers it.
The document that transfers ownership from the seller to the buyer. It is recorded with the county and becomes a link in the property's chain of title. How you hold title matters more than most buyers realize, and it is decided at closing — ask your closer.
Money the buyer puts up when the contract is signed, showing the offer is serious. It is credited against what the buyer owes at closing. Depending on the contract, it may be held by the real estate broker or by our firm. When we hold it, send it through the earnest money link on our website — that channel is for earnest money only, never for closing funds.
The word carries two meanings in a closing, and they are easily confused.
Attorney escrow — the trust account where our firm holds funds relating to your transaction until they are disbursed. This is the account buyers wire closing funds into.
Lender escrow — an account your lender sets up after closing to pay your property taxes, hazard insurance, and mortgage insurance. Your monthly payment then includes one twelfth of each of those, and the lender pays the bills when they come due.
Homeowner's insurance, covering damage to the home and liability. Your lender will require it and will need evidence of coverage before closing. Pay the first premium directly to your agent beforehand, or we can collect it at closing.
A licensed inspector's report on the home's structure and systems — heating and air, plumbing, electrical, roof, attic, insulation, walls, floors, windows, doors, foundation, and crawl space or basement. Your contract determines whether an inspection is allowed, who pays for it, and whether the seller must repair what it finds.
Where a home sits in a subdivision or planned development with mandatory dues, the annual amount is prorated at closing, and there are usually transfer or initiation fees on top. Associations often charge for the closing letter we are required to obtain, and they can be slow to produce it, so tell us early if your property has an association.
A claim against the property securing a debt. Mortgages, unpaid taxes, contractor's liens, judgments, and child support arrearages can all attach to real estate. Liens must be paid off or released before clear title passes, which is what the title examination is for.
The exact amount required to satisfy an existing loan or lien as of the closing date, obtained in writing from the lender. Payoffs take time and some lenders charge for them, which is why we ask sellers for loan information as early as possible.
The buyer's promise to repay the lender. It contains the loan amount, interest rate, term, payment amount and due dates, and any prepayment penalty or late charge.
Costs divided between buyer and seller according to how much of the year each owned the property — property taxes and association dues most commonly. The seller pays for their portion of the year, the buyer for theirs.
Property taxes are prorated at closing: the seller pays for the part of the year they owned the property, the buyer for the rest. If the bill has been issued when you close, we collect each party's share and pay the tax commissioner. If it has not, the buyer receives a credit from the seller for the seller's portion of the year and pays the bill when it comes. Bills are typically issued in the fall and due by the end of the year, though timing varies by county.
If you buy a home this year and it will be your primary residence, file for your homestead exemption with the county. It is a one-time application, it is free, the deadline is generally April 1, and a surprising number of new owners never get around to it.
Filing the deed, security deed, and related documents with the clerk of the superior court in the county where the property sits. Recording is what makes the transfer public and establishes priority against later claims. We handle it after closing.
Georgia does not use mortgages in the way most states do. Here the instrument is a security deed, also called a deed to secure debt, and it conveys legal title to the lender as security for the loan, with title returning to the owner when the debt is paid. Practically speaking it functions as a mortgage does elsewhere, and people call it one. It is recorded alongside the deed. Everyone whose name appears on the deed must sign it at closing.
The itemization of every dollar paid and received by the buyer, the seller, and the lender. We prepare it from the lender's instructions and the terms of the contract, and it produces each party's bottom line. On most residential mortgage loans the Closing Disclosure serves this purpose; cash and commercial transactions use a settlement statement.
A sale in which the property is worth less than the balance owed, so the lender must agree to accept less than full payoff to release its lien. The lender's approval controls the timeline, and the file can move slowly through no fault of either party. We have negotiated short sales since 2007 and we represent the seller in the negotiation.
Also called a plat: a licensed surveyor's overhead drawing of the property, showing boundaries, improvements, easements, and encroachments. Not required on every transaction, but it is the only way to know with certainty where your lines are.
A licensed pest control operator's report on termites and other wood-destroying organisms. In Georgia it is the Georgia Wood Infestation Inspection Report on an existing home, or a soil treatment letter on new construction. Most lenders require one. The contract determines who pays for it. If the report shows a problem, the lender may require treatment or repairs before closing.
A search of the county's public records tracing the property's chain of title, confirming the seller owns what they are selling and identifying mortgages, liens, judgments, easements, and other claims that must be resolved before closing. This is a substantial part of what your closing attorney does, and most of it happens before you ever walk in.
Buying a house means buying its history. Every prior owner, every old loan, and every long-forgotten lien rides along with the deed.
There are two policies. Lender's title insurance protects the lender's interest and is required on nearly every loan. Owner's title insurance protects yours, and it is optional.
No title examination can guarantee a title is free of defects. A forgery somewhere back in the chain, an error in the public records, a deed signed by someone who lacked capacity — these are difficult or impossible to find in a search. If a claim is raised against an insured title, the company pays valid claims and also pays to defend the title in court.
The premium is a one-time cost, paid at closing and based on the price of the property. In effect you are pre-paying an attorney to defend your ownership for as long as you own the home. We see title problems every day. We think owner's title insurance is the best-spent money in the transaction.
Two separate Georgia taxes, both collected at closing.
The transfer tax applies when property changes hands and is calculated at $1.00 per thousand dollars of the sales price. A $400,000 sale carries $400. By statute and by custom the seller pays it, though the contract can shift it to the buyer.
The intangibles tax applies to a loan secured by real property when any part of the principal is due more than 62 months out — which is nearly every home mortgage — and is calculated at $3.00 per thousand dollars of the loan amount. A $320,000 loan carries $960. The borrower pays it.
Your contract controls who pays what. In the ordinary residential purchase the transfer tax lands on the seller's side of the settlement statement and the intangibles tax on the buyer's.
Criminals target real estate closings. They monitor email, impersonate agents, lenders, and law firms, and send convincing wiring instructions that route funds to accounts they control. A wire sent to a criminal is usually gone for good.
We deliver wiring instructions only through ClosingLock, a secure platform. We never send them by email, text, or attachment, and we never read them over the phone. Any wiring instructions that reach you another way are fraudulent, regardless of how legitimate the message looks.
Before sending funds, call our office at 404-719-5155 and confirm the instructions with the closer handling your file. Dial the number yourself from our website or your own records, never a number contained in the message.
