Back to the Basics: Settlement vs. Closing
January 8, 2019
Author: Kreg Wagner (UAR)
Very often I will hear agents, escrow officers, mortgage brokers use the terms Settlement and Closing interchangeably. Is there a difference between these two terms?
In Section 3.1 of the REPC, Settlement means that each party has 1) signed and delivered REPC required documents (typically the settlement statements) and 2) made all REPC required payments (other than loan proceeds).
In Section 3.2 of the REPC, Closing means that 1) Settlement has been completed, 2) Loan proceeds have been delivered, and 3) the Closing documents have been recorded.
So why does it matter? For one, the REPC has a Settlement deadline and not a Closing deadline. Remember, this is the time for documents to be signed and for all funds outside of the Loan proceeds to be delivered…by 5:00 p.m. of the Settlement Deadline.
So when does Closing need to take place? The REPC specifies that Closing “shall be completed no later than four calendar days after Settlement.”
Example: If Buyer and Seller have a Settlement deadline on a Friday, then it is certainly feasible that the Property will Close on the following Monday. This may come as an unfortunate shock to some Buyers who expected to use the weekend to move into the Property.
Please educate your clients about the difference between Settlement and Closing so that they have proper expectations for funding, recording, and ultimately possessing the Property.
If you have any questions about Settlement and Closing, please feel free to call the UAR’s Legal Hotline at 801-676-5211 on Monday, Wednesday, or Friday from 8:30 a.m. to 4:00 p.m.