It used to be the norm that all parties to a transaction showed up to closing — at the same time, at the same title company, in the same room. Real estate agents, buyers, sellers, the settlement agent, and the lender would attend, and the settlement was a formal event (formal attire and all!).
Now, more and more closings are “split.” Buyers and sellers choose separate title companies and close their respective transactions at different times, in individual companies, sometimes on separate days.
What are the benefits of a split closing?
- Quicker settlement. When parties sign separately, they do not have to be present for the other party to sign papers, thus facilitating a faster settlement. Also, practically speaking, the parties do not end up in lengthy discussions about the property sold at the table.
- Non-fiduciary relationship. When one title company handles both sides of the settlement, the title company must act as fiduciary to both parties. They must remain neutral and cannot advocate on either party’s behalf. In a split settlement, if you are the seller, your chosen title company can be an advocate for you.
- Confidence in results. In a split closing, each realtor typically recommends a buyer or seller use their preferred title company. The realtor can make a justified recommendation based upon past experiences with the title company chosen and have greater confidence in the company representing their client.
Drawbacks to a split closing?
- Potential miscommunication or lack thereof among title companies can cause delays. The more parties involved in a closing, the greater the potential for communication issues. Each title company is relying upon the other’s due diligence.
- Delay in resolving issues. Split closings can make it more difficult to resolve title issues on the day of closing. When all parties attend the closing, and one title company is involved, communication is facilitated more easily, and parties can more efficiently discuss and resolve walk-through and inspection issues.
- Delay in recordation. Title companies in Virginia have two days to record and disburse funds post-settlement. In a split closing, one title company must deliver closing documents to the other. Often, they are over-nighted, creating an additional day’s delay in the disbursement of funds and recordation of the deed.
In a split closing, you or your client must choose a reliable title company that values communication and resolving issues timely. Call Highland Title & Escrow to handle your next settlement!