Closing Day

In most cases, the closing is a formal meeting where the buyer, seller, their respective attorneys and real estate agents, and representatives from the lending and the title companies complete the sale and financing transaction. It is critical that your organization’s attorney is in attendance to review all documents before you sign them.

Documents to be signed at the closing include:

• Loan Agreement: This document outlines the loan provisions and requirements, such as warranties, contractual agreements for financial updates, agreements not to rehab the property without the lender's consent, etc. 
  
• The Note: This document is the organization’s promise to pay the lender according to the terms specified in the mortgage, including payment dates and penalties for falling behind in repayment.
  
• The Mortgage or Deed of Trust: This legal document secures the note and gives the lender a claim against the property if the loan goes into default. In other words, the mortgage gives the lender partial ownership in the property until the loan has been paid in full. It outlines the borrower’s responsibilities to pay principal, interest, taxes and insurance on schedule; to maintain hazard insurance on the property at all times; and to keep the space properly maintained.
  
  If the organization violates these terms of agreement, the mortgage contract gives the lender the right to foreclose on the property. The lender can legally seize and sell the property, and use the proceeds to pay off outstanding loans and other costs the lender incurred while pursuing the foreclosure. 
  
• The Deed: This document transfers ownership of the property from the seller to the organization.
  
• Inter-creditor Agreement: This document is needed when multiple lenders co-fund a project. The Agreement stipulates the process and procedures to be followed in managing the loan, such as which lender gets paid first in the event of default.
  
• Guaranty: This document is needed if the organization's executive director or board members personally guaranteed the loan.
  
• Other Documents: Depending on the type of loan you have, or the program you are using, you might have to sign other documents required by state law, the lender, or other parties at the closing. Be sure you and your attorney read all documents carefully before you sign them.

Now that all the documents have been signed, and the keys have been handed over, welcome to the wonderful world of property ownership!