In New Mexico, the customary practice is to hand over keys to the buyer upon RECORDING and FUNDING.
Closing occurs when both parties sign. The Buyer and Seller will close separately, with separate closing appointments. For the Buyer the paperwork for the loan is signed as well as required disclosures and tax documents. There also may be Power of Attorney to sign, estate documents, etc. The seller will be signing a Warranty Deed which conveys the real property over to the buyer upon recording, and other disclosures and tax documents.
The Buyer’s signing sometimes takes an hour or more, depending on any questions that the buyer has, and the type of loan that was prepared.
The Seller’s signing will take usually 30 minutes or less.
After the signing process, the title company then sends the paperwork back to the lender for a final review, and then gets authorization from the lender to RECORD AND FUND the loan.
A word of advice PLEASE DO NOT ASK FOR KEYS BEFORE IT IS FUNDED AND RECORDED! Yes, I’m shouting here. Why? It’s an insurance thing. A risk thing. It’s not your house yet!
There was a recent article in Inman News that explained this in detail, and I will try to explain it here.
Let’s say, you get keys early and while moving your items into the house, you trip and fall. Whose insurance claim is it now? How about you move in, turn on the oven to warm up that pizza and – boom – a fire starts…whose insurance covers this?
Now, why would a lender not approve RECORDING AND FUNDING? Well, a few common reasons…..on a last-minute review of the file, the lender finds out that the buyer has suddenly lost their job and didn’t disclose it. The buyer’s file gets reviewed and an undisclosed and undiscovered tax lien gets found and – wow – they can’t approve the loan.
How about this one – and it happened to me – the buyer starts removing carpet from a residence before funding and recording….the seller failed to sign. Don’t even ask me what kind of hair loss was caused by this. The buyer’s broker had handed over keys from the lockbox to the buyer without authorization and the buyer started renovations on the house. A neighbor alerted the seller to this activity, the seller got so upset that they refused to sign (they were out-of-town and receiving documents long distance). The whole thing turned into a big mess and – the home never closed. The buyer was out $$ for the materials, the seller didn’t ever end up selling, and….well you know the rest.
There are also title issues that can come up if you take possession early. Let’s say you move in, and start demolition on a landscape and install a patio slab. You could get this work done in a day. If you haven’t had your warranty deed recorded you don’t have title insurance and now you have an issue with property lines while installing this new patio and guess what – the survey/ILR that was done to insure property lines – no longer valid.
Why New Mexico is not a table funding state is another chapter, but suffice it to say that you do not want to take early possession or ‘get keys‘ as a convenience before you actually have full funding and recording on your closing.
It’s not good practice.
Happy Closings!
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