What happens at closing in Texas

Where and when

A Texas home sale closes at the title company named in the contract, on the closing date the contract sets. The title company is the escrow agent: it collects the buyer’s money and the lender’s, pays everyone the contract and the settlement statement say to pay, records the deed with the county, and issues the title policies. When the buyer and seller can’t sit at the same table, the title company can arrange for each side to sign separately.

In the days before

• The title company orders the payoff figures from your lenders and checks the tax records for what is owed.
• If there is a homeowners association, it gets the association’s resale certificate and any transfer fees.
• If the buyer has a loan, the buyer must receive the lender’s Closing Disclosure at least 3 business days before closing.
• Repairs you agreed to get done, and the buyer usually walks through the home shortly before closing to see it is in the condition the contract promises.
• The title company asks you for your ID, your forwarding address and how you want your money sent. Confirm any wiring instructions by phone: wiring money? call first.

The settlement statement

The settlement statement lists every dollar of the sale. On the seller’s side it starts with the price and subtracts: your loan payoffs; the owner’s title policy for the buyer, when the contract has you pay for it (¶6A); your share of the title company’s escrow fee; preparing and recording the documents; any amount you agreed to pay toward the buyer’s costs or a buyer’s agent; and the prorations below (¶12, ¶13). What is left is what you keep.

The net sheet estimates the same lines before you list, so the final statement holds no surprises.

What the seller signs

You sign the deed that transfers the home — in Texas it is prepared by an attorney — along with the title company’s papers. They usually include a statement that the bills for work on the home are paid, an affidavit about liens and who is in possession, a certificate that you are not a foreign person for federal tax purposes, and the information the title company uses to report the sale to the IRS on form 1099-S. Everyone who has to sign brings a current photo ID.

Payoffs, prorations and what you keep

In Texas, property taxes for a year are billed in the fall and paid after the year ends. So at closing you credit the buyer for your share of this year’s taxes, from January 1 to the closing date, and the buyer pays the whole bill when it comes (¶13). HOA dues are prorated the same way.

The title company pays off your loans directly, pays the other costs on the statement, and sends you the rest. The earnest money and the option fee are credited on the buyer’s side.

Funding and recording

A sale funds when the title company has all the money it needs, including the buyer’s loan, and has confirmed the conditions for closing are met. Then it pays out, and it records the deed in the county’s real property records.

Afterward the title company issues the owner’s title policy to the buyer (form T-1R) and, when there is a loan, the loan policy to the lender (form T-2).

After closing

The keys change hands when the contract says — often at closing and funding, or later under a written lease. Keep your copy of the settlement statement: it is the record of the sale for your taxes.

If this was your homestead, your homestead exemption was yours, not the house’s: the buyer applies for their own.