Documents that Need Review Before You Close

The Documents that Need Review

Before a real estate transaction can close, certain documents must be reviewed by your title company. “These documents primarily establish signing authority. In other words, they prove who has the legal right to sign closing documents,” Bryan Wright, attorney at Bluegrass Land Title, explains. While the exact documentation needed varies by transaction, common examples include Power of Attorney (POA) documents, estate documents, and corporate resolutions. 

Power of Attorney (POA) documents allow someone to sign on behalf of another person. These are often needed when a buyer or seller is on vacation, traveling for business, or unable to attend closing for medical or personal reasons. A POA must specifically grant signing authority for real estate transactions; general powers of attorney or medical POAs are insufficient.

Estate documents come into play when a property owner is deceased. These documents include wills, trust documents, and court orders that establish who has the authority to sell the property. The documentation must clearly show that the executor or administrator has specific authority to conduct real estate transactions.

Corporate resolutions and other business documents are required when any type of business entity, such as a corporation or LLC, is buying or selling property. These documents establish who can sign on behalf of the business. 

All of these documents require clear and specific language. They must explicitly state who has authority, be currently in effect (not contingent on future events), and specifically mention real estate transactions. In some cases, additional supporting documentation may also be required.

Why Documents Need Review Before Closing

“In a perfect world, all documents would arrive complete and ready for closing. But we have to prepare for the reality that many documents that grant signing authority may have deficiencies that need to be addressed before closing day,” Wright says. Each type of document has specific legal requirements, and the language used must be precise and explicit. Even documents that appear to meet all requirements at first glance need to be reviewed by the title company. 

Document issues discovered at closing can create significant problems that cannot be fixed at the closing table. These issues almost always delay closing because they require additional steps and involvement from multiple parties. For example:

• Court processes may be required for certain estate or guardianship matters
• Multiple parties may need to coordinate to resolve issues
• Additional documentation might need to be created or obtained
• New signatures may be required from parties who aren't present
• Legal waiting periods may need to be observed 

Early document review serves as a preventive measure against closing delays and complications. For example, a Power of Attorney is a great solution when one seller will be out of town on closing day. This documentation would allow their spouse or another representative to sign closing documents on their behalf.  

If this document is reviewed well before closing, there's time to address any issues, such as missing language about real estate transactions, and create a new POA that meets all requirements. Without early review, this simple oversight could delay closing by days or weeks while waiting for the seller to return or create a new POA from their location out of town.

The same principle applies to other types of documentation that grant signing authority. This advance review also helps set realistic timelines and expectations for all parties involved in the transaction. What might be a simple fix with adequate time can become a significant obstacle if discovered at the closing table.

When Documents Need Review

Documents should be submitted for review as early as possible in the closing process, ideally at the time the title order is placed. This early submission is important because resolution timeframes can vary significantly depending on the type of document and any issues discovered.

Unexpected situations that require document review can also arise during a transaction. A buyer might fall ill and need a last-minute Power of Attorney, or a seller might have unexpected business travel that conflicts with closing. Death of a party during a transaction, remote signing requirements, or medical crises can also create new documentation needs. In these cases, contact your title company as soon as you become aware of the situation. Early communication helps maintain closing timelines when possible.

How Issues with Documents Are Resolved

When issues are found during document review, the title company will communicate directly with the agent or client to explain the situation. This communication outlines the current status of the documentation, identifies specific issues that need to be addressed, and provides clear steps for resolution. The title company representative will also explain how they can assist with the process.

Resolution paths vary based on the complexity of the issue. Some situations have straightforward solutions. For instance, the title company can often draft a new corporate resolution that meets all requirements. These documents typically can be prepared quickly and only require signatures from the appropriate parties.

However, other situations may take weeks or even months to resolve, particularly if they require court involvement, coordination with parties in different locations, or mandatory waiting periods. Court involvement might be necessary for estate matters or guardianship situations. 

Additional documentation may need to be obtained from multiple sources, or coordination might be required between several parties. In these cases, the title company can provide guidance but may need to refer clients to outside attorneys for specific legal matters that are beyond the scope of title services.

The Real Estate Agent's Role

Real estate professionals have an important role to play in facilitating a smooth, stress-free transaction – especially in transactions that involve estates, a Power of Attorney, or business entities. 

Client Preparation

Preparing clients begins with information gathering. Agents should ask questions early in the sales process, such as: 

• Will all parties be available for closing? 
• Are any sellers out of state? 
• Does the transaction involve a deceased owner?
• For business entities, who has the authority to sign? 

This early discovery helps identify needed documentation, whether it's Powers of Attorney for traveling parties or corporate resolutions for business transactions.

It's equally important to set realistic expectations with your client. For example, if an agent learns they're dealing with an estate sale, they can explain that the executor will need specific documentation showing their authority to sell the property. If probate hasn't been completed, the agent can help the client understand that court processes may add several weeks to the timeline. This proactive approach prevents surprises and helps clients plan accordingly.

Document Management

Document management is another critical aspect of the agent's role. While agents juggle many aspects of a transaction, documentation issues can significantly impact closing. Timely submission of documents, follow-up on requested items, and maintaining copies of submissions help keep the process moving forward.

Communication

Communication is an important part of any successful real estate transaction; however, clear, timely communication is essential in more complicated transactions. Agents need to alert the title company to potential documentation needs, share relevant background information, and respond promptly to questions from the title company. 

Agents also serve as a key link to their clients, explaining review requirements, sharing timeline expectations, and coordinating resolution steps when issues arise. In some cases, agents also need to coordinate with other transaction parties to ensure smooth resolution of documentation issues.

Bluegrass Land Title's Role

In addition to document review, Bluegrass Land Title provides practical support, clear communication, and ongoing education for clients.

Support for Clients

Bluegrass Land Title takes an active role in providing practical support for successful closings. We provide guidance on document requirements, including necessary language, format specifications, and execution requirements. Where appropriate, we can draft certain documents such as Powers of Attorney and corporate resolutions to ensure they meet all requirements for closing.

Communication

Communication is central to our approach. Our attorneys communicate directly with agents and clients to ensure everyone understands documentation requirements and any issues that arise. When reviewing documents, we provide clear explanations in plain language about what we've found and what needs to be addressed.

If issues are discovered, we outline specific steps for resolution and explain how we can help. We understand that document issues can create anxiety about closing timelines, so we try to set clear expectations about resolution timeframes. We provide regular updates throughout the process and coordinate with all necessary parties - whether that's court officials, outside attorneys, or other stakeholders. Our goal is to keep all parties informed and working toward resolution without unnecessary delays to closing.

Education

The team at Bluegrass Land Title takes a proactive approach to educating real estate professionals. Our seminars and continuing education opportunities help our clients understand documentation requirements before issues arise. For example, Lunch and Learn sessions cover specific topics like handling estate sales or divorce situations, giving agents practical knowledge they can apply to future transactions. This knowledge also helps agents better communicate with and advocate for clients.

Limitations

There are some limitations to our role. While we can provide guidance on documentation requirements for closing, we cannot provide personal legal representation or represent clients in court proceedings. For legal matters beyond the scope of title services, we refer clients to appropriate resources, such as personal attorneys who can provide specific legal advice for their situation.

Action Items for Real Estate Professionals

When dealing with transactions that require document review, follow these steps to help ensure a smooth closing:

1. Talk with your client about whether anyone involved in the transaction will need signing authority through a Power of Attorney, corporate resolution, trust document, or estate documentation.
2. Once you know what's needed, gather the relevant documents from your client. If you're unsure about documentation requirements, reach out to Bluegrass Land Title - we're here to help identify what's needed.
3. Submit documents to Bluegrass Land Title for review as soon as possible. This allows time to address any potential issues that may arise.
4. Remember that your title company will work with you to manage timelines, obtain any missing documentation, and keep your client informed about next steps.

Document review is an essential step in the closing process that helps prevent delays and protects all parties in the transaction. Early submission of documents, clear communication between all parties, and realistic expectations about timelines are key to successful closings. 

While documentation requirements may seem complex, we're here to help guide you through the process. By working together proactively, we can address potential issues early and keep your transaction on track for a smooth closing.