September 2011 Vol. 4, No. 8

Underwriters' Bulletin

Claims Corner

Closing Procedures

Prevent Claims: Follow these Eleven Tips

ATG legal staff reviews claims at regular intervals. Based on our experience, we put together the following tips to help members avoid claims:

  1. Document files as much as possible. This is especially important with regard to funding approval from the lender. It is strongly preferable to get funding authorization in writing. Print and keep with the file any email approvals received to disburse funds. If the lender will not give written authorization to disburse, note the name, phone number, time, and date that you received verbal approval to disburse funds.

  4. Do not allow disbursements based upon a verbal payoff figure. The sellers must present a valid, written, payoff letter at the closing. If one is not available, contact an ATG staff attorney for direction on how to proceed. See "All Payoff Information Must Be in Writing," January 2005 the ATG concept, for more information.

  7. Ensure that all property owners sign the mortgage. You can have more people on the mortgage than on the deed, but you must always have all the grantees of a deed on the face of the mortgage and as unconditional signatories on the mortgage. See "Omitted Mortgagor - Whoever Owns Property Must Unconditionally Execute the Mortgage," August 2009 ATG Casenotes and Underwriters' Bulletin, for more information.

  10. Doublecheck signatures: signing to waive homestead is not considered signing the mortgage as a mortgagor. If a spouse is signing the mortgage solely to waive homestead rights, that spouse cannot be a grantee on the deed.

  13. Be mindful of water certificate procedures and deadlines for Chicago property. Provide all documents at closing. The water bill must be paid prior to closing and the party must obtain a valid water certificate from the Water Department. Water certificates are valid for 60 days from the authorization date, which is located on the bottom left corner of the water certificate. When the water bill is paid, there will be a computer-generated validation on page six (6) of the City Transfer Declaration. You must have this document at closing. The validation date indicates the date the water was paid and the amount. Note that we must close within 50 days of the authorization date:
    • Even though the water certificate is valid for 60 days after the authorization date, we must close within 50 days of that date to make sure we have enough time to pay the water and/or record the documents. If the water certificate is 50 days or older, please call an ATG underwriting attorney for approval.
    • All water certificates must be signed by the Water Department for the certificate to be valid.
    • If a water certificate will expire soon, mark the outside of the package sent to ATG.
  14. Check all powers of attorney used at closings against ATG's underwriting guidelines. The Power of Attorney Act changed recently. See "Powers of Attorney and Real Estate Fraud," March 2011 ATG Casenotes and Underwriters' Bulletin, for more information regarding the new Power of Attorney Act.

  17. Direct incoming funds, including the lender's draft and buyer's check, to ATG's Disbursement Accounting Department with a copy of the HUD-1 as soon as possible after funding. Depositing these funds as soon as possible is crucial.

  20. Present the proper municipal stamps at closing. If the property is located in a city that requires municipal stamps (see the ATG Real Estate Transfer Ordinances Chart), present them at the closing. The transaction cannot disburse until the closer has the stamps.

  23. Arrange for the proper title indemnity on transactions where the real estate taxes have been sold. ATG requires one and one half times the amount of the Estimate of Redemption be held in a title indemnity when real estate taxes have been sold.

  26. Complete the proper title indemnity agreements. In order to prevent confusion after a closing, complete a Personal Undertaking with Title Indemnity Deposit Agreement (TI). Correct and complete information is important for TIs processed through ATG's Escrow Department and for TIs that members handle in their offices. An incomplete TI that is provided to the Escrow Department could lead to errors in the handling of the TI. Providing clear information on a TI is essential because there is always the possibility that the issue that gave rise to the TI may result in litigation. See "Title Indemnity Deposit Agreements," March 2009 ATG Casenotes and Underwriters' Bulletin, for more information.

  29. Resolve all closing issues before the transaction disburses. This is especially important where title and survey matters are involved.

If you have any questions, contact the ATG Underwriting Department,, 217.403.0020, or 312.752.1990.

© ATG|Casenotes/Bulletin 1109_v4n8

[Last update: 9-19-11]