This Mistake May Delay Your Closing
A closing should be just that: the end of a long process that leads to the beginning of new and prosperous opportunities for both parties involved.
Bisnow caught up with Chicago Title Insurance Co AVP and assistant regional counsel Jeff York to discuss what you can do to ensure there are no impediments to finalizing and closing a deal when new construction is involved.
"The title company's concern is whether there's been any work done on the property or any contracts signed for future work on the property. The earlier we know about it, the more likely we can handle the problem without a major delay. Unfortunately, we often don't find out until closing and then we are forced to pump the brakes."
Jeff says every state has different underwriting requirements, but in Illinois, buyers must disclose any work that's been done on the property within the last six months and they should also make known any contracts for future construction that are already in existence.
Construction escrow underwriter and AVP Brienne Berscheid says, due to the complexity of the Illinois Mechanics Lien Law and other regulations, very often certain situations that could lead to hold-ups actually appear immaterial. Communication between all parties is key to ensuring a smooth closing.
"We always do our best to get out in front of any potential issues," Brienne tells Bisnow. "Our staff can assist in dealing with complicated issues that may arise when closing a sale with new construction. If the parties are funding a project with a construction loan, the lender will likely request interim mechanic's lien coverage. As soon as we are aware that construction has begun on a project, we will work with the owner and the contractors to ensure that the parties have collected the necessary sworn statements and waivers to provide the requested coverage to the lender in advance of the closing."
Brienne recommends that those interested in closing construction projects take the time to review Construction Issues At Closing: A Title Company's Perspective, which was written by Jeff. The article explains the important points to consider when closing a sale involving new construction in Illinois. In addition, Chicago Title recently gave an insightful webinar covering the construction loan process and how to keep projects on track. The recorded webinar and course material are available to view and download on its website.
To learn more about our Bisnow partner, click here.