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Real Estate Conveyance Nightmares
Who hasn't heard someone share a nightmare of a story about the hassles and hurdles associated with real estate closings? Such stories have become so commonplace, regrettably, that it almost seems as if it has become a competition for worst experience. It is a wonder that anyone puts him/herself through the stress of being held hostage and completely at the mercy of the lending institutions and law offices that process the numerous, unwieldy documents that require a translator for comprehension.
Failure to manage the process in a proactive and timely manner seems to be the complacently accepted status quo, which continues in spite of lessons that were supposed to have been learned from the bursting of the housing bubble that led to the current recession. And, it seems not to matter in the least that people may be harmed or extremely inconvenienced in the process.
Our recent experience with conveyance of real property (my first time as seller) confirms this. We reached out for information numerous times, only to be informed that the lending institution was notorious for doing things at the last minute. Somehow, because this was apparently widely and well known by those in the business, it was also tolerated with a resigned sense that no one was empowered to do anything about it. To me, this is not right, and it should not be accepted. Only when such institutions and the people involved are actually held accountable for their failures can we hope that things will change for the better.
The day before what was supposed to be closing day, the first-time buyer still had documentation outstanding, so the loan was not approved or cleared to close. How does that happen when everyone involved knew the terms of the purchase and sale (P&S) agreement and was supposed to be working diligently and in good faith to meet the agreed-upon closing date? The result was a delay in closing by one day, no questions asked or consideration given to the inconvenience incurred by the other parties involved. A one day delay may not seem like a big deal, but it did prompt the need to draft an extension of the P&S at our insistence.
Because we were out-of-state parties to this closing, we covered ourselves with a power of attorney (POA). However, that person was not well versed in real estate transactions (unbeknownst to me at the time) and handled the matter as a favor. We were easily in touch by email and phone to address questions, provide information, and review documents. Although I now know that we were entitled to one full day to review the HUD (settlement) form, we received an email copy just one hour before close of business the night before closing day, with the appointment to close set for noon the following day.
With no one available to answer our questions or address our concerns that night, we scrambled to get what we needed early the following morning. At that point, we were told in writing that there would be no adjustments made to the HUD. What we know now was really meant was that there would be no adjustments made unless they were adverse to us, as later events played out.
In the middle of the closing, our attorney/POA called to say he needed more funds wired because we had not provided enough to cover broker fees. Now, please understand, as reasonable and intelligent people, we had done our own calculations and knew roughly what the numbers should be, budgeted accordingly, and provided an excess cushion just to be on the safe side. Nevertheless, without the actual HUD document in front of us, because it was revised during the closing after all while we were in absentia, we wired the alleged missing funds in a show of good faith, understanding that we would review the numbers closely when the updated copy was eventually shared with us.
Hours later upon prompt review of the documents executed during the closing, it became clear that we had overpaid broker fees due to a mixup at the closing attorney's office and mistakes made in calculations during the process. So, we alerted the necessary players and are now completely up in the air as to where things stand or if/how they will be resolved in time to get the closing recorded. It is not a good place to be, and I have often questioned why it seems so hard to do the right thing. In the meantime, the buyer benefits from the use and enjoyment of the house.
Upon follow-up with our attorneys, we have been told that mistakes on the HUD are not uncommon, and we should not sweat it. Really??? Am I the only one having a problem swallowing that? If the people with the actual expertise and knowledge cannot get these documents right, then how are we as novices expected to make up for their shortcomings?
The HUD is a legal document. Do people not take seriously that which they sign or realize, as I do, the possible ramifications? To add insult to injury, the closing attorney's office is somehow blaming us, when we were not physically present, did not see the revised document until after it was signed by our POA, we trusted our POA, and we did not actually fill out the form -- that law office did, and they had everything they needed from our realtor to do it right the first time (and, please remember, we were told that morning in writing by that same firm that no adjustments would be made to the HUD). Our realtor made it clear to them that he had already been paid.
We had no issues or concerns with the original figures we reviewed on the HUD pertaining to the broker fees. Our initial questions related to other line items on the HUD. This entire situation put us at a significant disadvantage in the manner in which it was handled from the start, and these matters are supposed to be fair and equitable for all involved. Each step of the way, when we were asked to produce documentation, we produced it in a timely manner. If people said jump, we jumped. We were extremely proactive and motivated. Had others followed our example, perhaps this entire situation could have been avoided altogether.
This scenario is fraught with numerous breakdowns that represent multiple opportunities to improve and make things better if egos could just be set aside long enough to learn from the mistakes. To enable that, one has to first own up to the mistakes, which is a true sign of character, in my opinion. Finger pointing and allocating blame are not constructive or productive. No one does their best job with their backs up against the wall in the heat of the moment overwhelmed with information and data. We are all fallible human beings, no matter how "expert" we may be because of the daily, routine jobs we do or the knowledge we possess. That is one commonly shared immutable human trait that transcends age, title, stature, or gender.
If fixing mistakes is too much of a hassle, then the entire process should be changed along with the associated documents to make it all much easier to manage. Everyone should have a checklist of what needs to get done and by when, and there should be consequences for failure to meet the intermediate milestones identified between execution of the P&S and the closing. It should also be clear how long it takes to perform each step in the process, and timelines should be set accordingly. The overall time for this process flow should determine the closing date, with reasonable time included for review of documents by the necessary parties. The documents should be revised, simplified, and made foolproof in their manner of design. It is absolutely unacceptable to say that nothing can be done to change any of this. There is always a way. It is often just a matter of how much energy to expend and/or what price to pay.
No doubt this story pales in comparison to others out there. However, it has truly been a nightmare for us. We are so eager to put this ugly matter behind us for good, but the resolution as of yet remains unclear. Real estate transactions typically are associated with a high degree of stress and unpleasantries. If the institutions and people involved were more attentive to details and conducted themselves in regards to others the way they would want to be treated, perhaps there could be a day when real estate conveyance nightmares are the rare exception instead of the woeful norm. For us, we are vowing to never deal with it again. It is just not worth the hassle and stress or friction between us, especially when there can no longer be any guarantee that the investment will actually appreciate over time.
Please feel free to share your real estate conveyance nightmares by way of comments. Or, if you have any insights to share regarding this story, they would be appreciated, too. For me, writing letters of complaint in the meantime may provide at least some measure of satisfaction.