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Buying and Selling Homes

Dry Closing?

16 years ago

Ok, as you may know, we are closing on the house we are buying in 2 days. We are supposed to close anyway, but now our rea says that the sellers have not paid some taxes, do not have the money for them right now, and we are going to do a 'dry' closing.

She says that everything is taken care of, and the property will be ours on Thurs. But, I did an internet search and found this:

"In our office, we put a capital F next to the closing on our calendar when the transaction is funded. If that F isn't there within an hour or so of closing, a manager calls all parties and asks if they would like to proceed with a dry closing. If not, the closing is postponed. If they wish to go ahead and sign, we use a dry closing disclosure. Here's what it says:

"Due to circumstances beyond our control, your closer has come to the table with an unresolved situation that prevents the disbursement of funds, and hence actual conveyance of the real estate.

We make every effort to contact all parties before the scheduled appointment to offer the choice to come to the table or not. If we were unable to reach you OR the situation causing the delay just occurred, let the closer explain the situation and then make a choice whether you prefer to sign documents or not.

SITUATION:

What is a dry closing? It is actually NOT a closing at all. A dry closing occurs when the parties meet to sign documents, but no funds are disbursed. The meeting typically takes place for the convenience of the parties.

By signing below, you are acknowledging that you understand that until funds have been disbursed, the real estate has NOT been conveyed and unless the "situation" is resolved in a timely fashion, these documents may be destroyed and a new meeting scheduled for closing."

This is a generic dry closing disclosure. You can use it for outstanding conditions, too.

Good luck and remember these are dangerous times. Be careful."

I'd hate to have to pay the movers, and have everything delivered to the house, and have them turn around and tell us that we have to pay their taxes...

Has anyone ever dealt with this before?

Thanks!

~Christina

Featured Answer

brickeyee

16 years ago

It varies by location.
Dry closings are more common in the west.
They are prohibited in Virginia and some eastern states.
All funds at closing are required to be collected.
That is th problem with personal checks at Virginia closings.
You will usually be allowed to give a personal check for smaller amounts, but the closing company is then on the hook if your check bounces. THEY must make good on the amount.

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Comments (10)

triciae
16 years ago
Christina,

Why is the closing agent not taking the funds for the outstanding taxes from the seller's net proceeds & paying the taxes?

/tricia
qdognj
16 years ago
lol, i thought there was no celebratory champagne at the closing,hence DRY,lol
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As you rightly assumed, in a refi, there is a 3 day right of recission under Federal and many state's laws. You sign all the paperwork, but don't get the money until the 3 days (business days) have expired. You can't waive the right. What's happening is that the closing company is protecting themselves and you. The settlement or funding date is the first date they can send out the payoff funds to the bank. The payoff letter can be written several ways, with an exact payoff amount on a certain day with a per diem for additional days or it can give a payoff amount effective through a future date (often the end of the month). The closing agent will figure out the amount for the payoff as of the funding date plus 1 and then will add a few extra days cushion. Why? If FedEx is late, if the clerk at the bank doesn't process it, whatever, if the funds are insufficient, then your loan is not paid off until the bank gets that extra hundred fifty bucks you wouldn't let the closing agent send. You get additional per diems and alot of hassle. You blame the closing agent and the bank, they blame you. Fun all around. Of course if you send too much, the bank is supposed to refund you the difference and they will....eventually. I usually see 2-3 days extra after the settlement day +1, so 7 days is a bit much, but you will get the difference back and you will be reassured that enough money was sent to payoff the loan.
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xamsx
16 years ago
Wet settlement vs dry settlement questions come up frequently. Unfortunately, that phrase (or wet ink/ dry ink, wet funding/dry funding) aren't all that searchable. *sigh* I could only find this thread for direct experience.

HTH
terezosa / terriks
16 years ago
In Oregon and other western states most closings are "dry". The parties usually go to the title/escrow company at different times and sign their respective paperwork. After the loan documents are signed they are overnighted to the lender for review. After review, the funds are released (usually the next day, sometimes same day if the lender is local), the seller is paid and title is transferred and recorded.
kitchenshock
16 years ago
Its not a big deal. The last two properties I sold were dry closings. The only negative as a seller is you don't get the satisfaction that comes with a check being handed across the table. My lawyer handles everything and simply wires the funds when the loan is funded. As a buyer you will not know the difference.
mmmagique
Original Author
16 years ago
"Posted by triciae (My Page) on Tue, Nov 6, 07 at 14:54

Christina,
Why is the closing agent not taking the funds for the outstanding taxes from the seller's net proceeds & paying the taxes?

/tricia"
Hi Tricia;

The sellers are upside down on the house. They have been attempting to sell it for over six months, so they have no money coming to them.

I did find out after posting this that the money owed is in excrow, so, hopefully that is the case, and I am just nervous over nothing.

I just worry about getting there and finding out then that we will have to pay more or go...

Thanks for your help, everyone!

~Christina
HU-675075812
3 years ago
My husband is closing tommorrow jan 8th and im the gifter and with covid my bank made me make a appt to wire the funds which is after the closing im confused
maifleur03
3 years ago
HU it would have been better if you started a new thread rather than tagging on to one that is 13 years old.

You need to talk tomorrow to the real estate/closing agent, the bank and probably an attorney if you are in truth gifting rather than buying jointly with your husband. A lot depends on state laws.
JJ
3 years ago
Good grief ma'am. See a lawyer.

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