Key Takeaways
- North Dakota closings are typically handled by title companies or attorneys
- The closing disclosure must be provided at least 3 business days before closing (for loans)
- Prorations for taxes, insurance, and HOA dues are calculated at closing
- Title insurance protects against defects in title
- Recording fees, transfer taxes, and other costs are allocated between buyer and seller
Closing Procedures
The closing (also called settlement) is the final step in a real estate transaction where ownership transfers from seller to buyer.
Closing Agents
In North Dakota, closings are typically handled by:
| Agent Type | Role |
|---|---|
| Title Company | Most common, handles title and closing |
| Attorney | May represent buyer or seller |
| Escrow Agent | Neutral third party |
Pre-Closing Activities
Title Examination
| Step | Purpose |
|---|---|
| Title search | Review public records for ownership history |
| Abstract | Summary of all recorded documents |
| Title commitment | Preliminary title report |
| Clear title | Resolve any issues before closing |
Document Preparation
| Document | Purpose |
|---|---|
| Deed | Transfers ownership |
| Mortgage/Deed of Trust | Secures loan |
| Promissory Note | Borrower's promise to repay |
| Closing Disclosure | Details all costs |
| Affidavits | Various certifications |
Closing Disclosure Requirements
For loans subject to TRID (TILA-RESPA Integrated Disclosure):
| Requirement | Details |
|---|---|
| Timing | At least 3 business days before closing |
| Content | All loan terms and closing costs |
| Changes | May require new 3-day waiting period |
| Provider | Lender provides to borrower |
Prorations
Items prorated at closing:
| Item | Calculation |
|---|---|
| Property taxes | Based on current tax year |
| Insurance | If buyer assumes policy |
| HOA dues | Based on assessment period |
| Rent | If property is rented |
| Utilities | Sometimes prorated |
Proration Methods
Annual Proration (365-day year)
Daily rate = Annual amount / 365 days
Monthly Proration (30-day month)
Daily rate = Monthly amount / 30 days
North Dakota Property Taxes
| Timing | Tax Year |
|---|---|
| Assessment | January 1 |
| Payment | Varies by county |
| Proration | Based on ownership period |
Note: In North Dakota, property taxes may be paid in arrears, affecting how prorations are calculated.
Title Insurance
Types of Title Insurance
| Type | Protects |
|---|---|
| Owner's Policy | Buyer against title defects |
| Lender's Policy | Lender's mortgage interest |
What Title Insurance Covers
| Covered | Not Covered |
|---|---|
| Unknown liens | Known defects |
| Forgery | Defects disclosed before purchase |
| Undisclosed heirs | Government action (zoning, etc.) |
| Recording errors | Survey issues (usually) |
Closing Costs
Typical Buyer Costs
| Cost | Description |
|---|---|
| Loan origination fee | Lender charges |
| Appraisal | Required by lender |
| Credit report | Lender requirement |
| Title insurance | Owner's and lender's policies |
| Recording fees | For deed and mortgage |
| Inspection fees | Home, pest, etc. |
Typical Seller Costs
| Cost | Description |
|---|---|
| Commission | Real estate agent fees |
| Title insurance | Sometimes seller pays owner's policy |
| Deed preparation | Attorney or title company |
| Payoff | Existing mortgage balance |
| Prorations | Seller's share of taxes, etc. |
Funding and Recording
Closing Day Process
- Final walkthrough - Buyer inspects property
- Review documents - All parties sign
- Funding - Funds transferred to escrow
- Recording - Deed recorded with county
- Disbursement - Funds distributed to parties
- Key transfer - Buyer takes possession
Key Point: Title transfers when the deed is delivered and accepted, not necessarily when recorded. Recording provides notice to the world.
How many business days before closing must the Closing Disclosure be provided for TRID-covered loans?
When does title to property transfer in North Dakota?
Which type of title insurance protects the buyer against defects in title?