What should you expect from a closing company?

[Bill4728]

What should you expect from a closing company?

Here is what you should expect when closing a deeded TS

For a deeded TS
1) Sales contract
2) Estoppel Research ( including ROFR )
3) Make sure all taxes are fully paid.
4) Escrow management
5) Prepare new deed and file deed with the county
6) Optain the transfer/ resort notification form(s) from the TS management company, route the forms to buyer and seller for completion, submit forms to TS management company and ensure they are processed.
7) Verify transfer occurred without issues

Here is what you should expect when closing a non-deeded TS

The closing company still does the following (for a non deeded TS):

1) Sales contract
2) Estoppel Research
3) Escrow management
4) Optain the transfer form(s) from the management company, route the forms to buyer and seller for completion, submit forms to management company and ensure they are processed.
5) Verify transfer occurred without issues

So it is often 3/4 the work effort of doing a deeded tmeshare.

It gets more expensive to do when the (resort) is located in Mexico or the Caribbean for example. Mail can take 1-2 weeks each way so the closing company will often use FedEx at $35 per envelope to save time.

 

[mtgolfer]

Thanks for the useful information Bill. Can you tell me what is normal in regard to when you should expect to make payment in full when purchasing a timeshare? I have always insisted that I receive a contract first, but it amazes me how often I have been requested to make payment before I even see a contract. Thanks

Bob

 

[intromaster]

So, after you purchase the timeshare on eBay what's the next step?

I just bought my first timeshare off eBay and now the seller has sent me the contract for resale, buyers questionnaire, etc.

The seller tells me I am supposed to sign the forms and fax these documents to the closing company along with full payment. The funds will be held in escrow until delivery of the deed is recorded.

How do I make sure all the taxes are paid and up to date as well as making sure there are no liens on the unit?

Please help.

Thanks
Mike

 

[ttt]

The closing company does not generally prepare the sales agreement or contract. They do usually require a copy so they can abide by the terms of the agreement, but most contracts are made prior to the closing company involvement.

 

[johnmfaeth]

It is true that many closing companies will not produce the original sales agreement, often one already exists.

Often a sales contract not been created, or is nebulous, or does not include the name of the closing company and indication that it will hold escrow, or is missing key info such as when MF's start, when taxes start, first use year, banked weeks, etc.

Then a good closing company will gladly supply a standard agreement so no misunderstandings of the deal exists (as part of their standard package pricing). These misunderstandings are 90% the cause of problems between the buyer and seller. In a highly regulated state like NJ, it is essential that the escrow agent obtain in writing exactly what is being sold (and the terms) so escrow can be eventually closed out as per the "contract".

Furthermore, many companies that do escrow in lightly regulated states will release the escrow as soon as transfer documents are in the mail to the resort. What happens when a problem is discovered when the resort is doing the transfer, in that case the buyer's money is already in the seller's pocket and the buyer has no "leverage". This occurs because most big closing companies do lots of closings for the same sellers who want their money prematurely.

My opinion is that it is negligent to fully close the escrow out until the buyer actually has their new account setup with the resort and that account shows a zero balance.

To me, that is "full service" and full protection for the buyer, that's the attractiveness of escrow in the first place.

So in actuality you heve three types of firms:

1) Deed preparers who also send the deeds for recording
2) Closing companies who do "partial" escrow, no sales agreements
3) True full service firms who handle everything in a robust manner so neither party (especially the buyer) ever experiences financial risk.

 

[johnmfaeth]

As to MT's question...

Seller focused firms always want payment in full with the contract submission. In reality, when closing a $500 or $1000 deal, it is a nuisance to get small downpayments.

As soon as the deed is executed by the seller (or a RTU lease transfer document), the closing agent must have payment in full so that the seller has no risk. Once the deed is sent for recording (or transfer paperwork sent to the resort), the unit is technically sold and in the possession of the buyer. The buyer could get a certified copy of the recorded deed and do the resort notification themselves and the seller's only recourse would lay with the courts, thus defeating the concept of escrow.

So the real requirement is to have payment in full (and funds cleared in the escrow account) before releasing the actual change of ownership docs.

 

[mtgolfer]

John, thanks for the response, but maybe I need to reword the question. Would you agree that as a buyer, you should never pay for the property before you sign a contract? Today is the 3rd time in a month that I have been asked by the seller to make payment to paypal before seeing a contract.

Bob

 

[ttt]

MT-In normal circumstances where a buyer & seller agree on terms of a purchase/sale, a contract should be executed to protect all parties.
But when you buy on ebay for a nominal price, you are essentially agreeing to the sellers terms when you bid on a timeshare.
Look at it this way: If a County has a tax sale, you must comply with their requirements, pay upfront and allow the county to close the deal upon their terms. We do this because we are getting a property cheap & we have to "jump through certain hoops" to become the owner.
Same with ebay. A big seller on ebay does not want to get caught up in all the delays and paperwork associated with formal closings so they streamline their closing process cookie cutter fashion for a nominal sale. They list their closing requirements in the sales offering. If their closing requirements don't meet with the bidders approval, they can ask if the seller will allow the buyer to select their own closing agent in advance of bidding. Some will & many won't because of the profit motive & also because the file is already partially processed by the sellers closing company...