Are you in a situation that you can’t attend the closing of your home? What are your options? Pay close attention to this article. Not all Realtors educate their clients on the do’s and don’t of closings. Hope, this article will put your mind at ease and will answer any questions about your responsibility of a closing. This will help those that are military or someone that has already relocated away from the area. Thank you, Joel Gerber with Brannen, Searcy, and Smith of Savannah, GA. for providing this article.

We all love a closing! After all the hard work put in by the Realtors, lenders, closing attorneys, etc. it’s time to sign. One of the most common questions we are asked is how can a buyer sign the closing documents if he or she cannot attend closing. While there are a number of alternatives to signing in person (and every law firm handles that issue a little differently), we wanted to provide a brief summary of those options and the nuances involved with each.

Remote Cash Closings

Let’s start with the easiest type of signing – the cash closing. When a buyer cannot attend the closing, we simply email the buyer a final settlement statement, settlement statement addendum and a buyer post-closing information sheet. Each of those documents can be printed, signed and scanned back to us prior to closing. We do not need originals and there is no need for a notary or witness, but those documents cannot be e-signed. Pretty simple!

While we can set up a power of attorney (“POA”) for a cash buyer, it requires the buyer to have the POA signed in front of a witness and separate notary and we must have the original back to close. Once we explain the two options, the buyer almost always elects to close it remotely without the need for a POA.

Loan Closings

A closing involving a lender is the most common transaction we encounter on a daily basis. If the buyer cannot attend closing, we generally have two options: a power of attorney or a remote closing. Both of these options get the job done, but they are handled very differently. We discuss these options in detail with the buyer and most often the buyer gets to choose how to close.

Power of Attorney Closing

If the buyer cannot attend closing and elects to appoint a POA who can attend closing in person, the buyer signs a POA (which is a document usually prepared by the closing attorney and approved by the lender) which grants an individual authority to sign all of the closing documents on the buyer’s behalf. The POA must be wet-signed in front of both a notary and separate witness (neither can be related to the buyer). Once signed it is critical that the buyer scans the law firm a copy of the POA to review and approve before placing the original in Fed Ex. On the closing date the buyer is required to contact our firm to confirm that he or she is alive and well. I know that sounds morbid, but if the buyer dies prior to the closing then the POA is no longer valid.

Most of the time the lender requires that we have the original POA in hand prior to the closing. Because many of the buyers in our area are serving in the military overseas, it can take a while to receive the original POA back in our office. That is why it is so important for our firm to know if a POA will be needed as soon as possible.

Closing on a Scan of a POA

While not the preferred procedure, we can at times close and fund the transaction on a scan of the POA. That option is not common and oftentimes not allowed by the lender. But if the lender will allow our firm to close and fund on a scan, the only other requirement is that we must have proof that the original POA has been placed in overnight mail (even though it may not arrive at our office until after the closing is completed).

The Buyer Already has a POA

There are instances where a buyer already has a POA in place. When that occurs, we obtain a copy of the POA and send it to both our title company and the lender for approval. If both the lender and title company approve the POA, then we do not need to have another one signed prior to closing.

The Lender Will Not Allow a POA

While the use of a POA at closing is very common, there are a few lenders that will not allow a POA to be used at closing or, more commonly, the lender will only allow a POA if the person signing as POA is related to the buyer (which sometimes is not an option). If a POA is not an option, then the only other choice is a remote closing.

Loan Remote Closing

A remote closing occurs when a lender is involved and the buyer cannot attend the closing in person (and the use of a POA in our office is not an option or the buyer elects not to use a POA). While we conduct remote closings frequently, they are without a doubt a logistical challenge. Unlike a traditional closing where the buyer comes to our office, eats candy and signs the closing package, a buyer signs the closing package on the day of closing at a law firm or title company wherever the buyer is located in the United States.

The Process

We require the buyer to locate a law firm or title company in whatever state they will be located in on the day of closing. Once the buyer identifies the individual that will be assisting with the closing, our firm then provides instructions to that company regarding our procedures, including the requirement that the buyer sign in front of both a notary and separate witness (neither of whom can be related to the buyer).

To summarize, we securely send the loan package to the law firm or title company one business day before closing. The buyer signs all of the closing documents and then before the buyer leaves the closing, we ask that all of the documents be scanned to our firm for review to ensure nothing was missed or executed incorrectly. After we have approved the executed documents, we ask the law firm or title company to use the Fed Ex label we provide to overnight the loan package back to our firm. Once we receive both the original documents and funding authorization from the lender the closing is officially completed.

Can a Mobile Notary be Used Instead of a Law Firm or Title Company?

Yes, but it is not recommended. Most mobile notaries are great and so convenient when you need a document or two signed. The issue with many of the mobile notaries we have worked with in the past is they are not willing to follow or accommodate the procedures we have in place to ensure a perfect closing. As mentioned above, receiving a scan of all of the closing document to review and approve before the buyer leaves the signing is so important. Most mobile notaries do not have the ability to scan a 100-page loan package back to our firm prior to leaving the signing. Most of the time the mobile notary will scan us a copy of the loan package many hours after the signing and if certain documents need to be corrected they have to track down the buyer (who is usually back at work or no longer near the notary) at some point later in the day (and oftentimes that results in the Fed Ex package not being picked up on time).

Also, many mobile notaries are not familiar with a loan package and when that occurs there are so many documents that are signed incorrectly or not at all. That scenario creates an abnormal amount of stress on the buyer in an already stressful situation. A majority of the law firms and title companies see loan documents frequently and understand the importance of the procedures we put in place to ensure a smooth closing.

Sometimes the buyer is in a location where he or she cannot locate a law firm or title company to assist and a mobile notary is the only option. When that occurs we speak to the mobile notary to go over our guidelines to ensure they understand our expectations.

Can a Remote Closing Signing Occur Prior to the Closing Day?

While most lenders require that the closing documents be signed on the day of closing, there have been a few instances where the lender allowed the closing documents to be signed a few days before closing. When the lender allows an early signing (which is quite rare) we must check with the notary to ensure that he or she is comfortable notarizing documents that are signed on a day that it different that the date printed on the documents.

Can a POA be Used at a Remote Closing?

The short answer is yes. A remote closing using a POA is one of the toughest types of loan closings for both the person signing the documents and the closing attorney. As many of you know from attending a POA closing, the person signing as POA must sign a long signature line for the buyer. It is usually something like: Borrower’s name, by the name of the POA, as Attorney in Fact. It is tough enough to sign as POA when the POA is sitting next to the closing attorney monitoring each signature, but even more challenging when the POA is signing outside of the closing attorney’s office. On many of the POA remote closings there are numerous documents that are signed incorrectly or under the signature line (which is frowned upon by the lender). Reviewing all of the documents before the POA leaves the signing is so critical as any document signed incorrectly must be re-signed.

Common Problems with a Remote Closing

When the buyer and remote closing attorney follow our detailed instructions the closing almost always goes perfectly. It’s when they do not follow our instructions that things can go a little sideways and unfortunately that is out of our control. For example, we have folks that do not scan us copies before the originals are placed in Fed Ex. When that happens, we won’t know if there are any issues with the executed documents until the originals are delivered. If any of the documents need to be re-executed then that just further delays funding and closing. Also, we have situations where the Fed Ex never is picked up or gets dropped off at a location that has already picked up for the day. When that happens funding is delayed and we must wait until the original documents are delivered to our office. Finally, there can be a delay with Fed Ex. When that happens all we can do is notify all parties involved of the delay and hope that the lender can hold funding until the originals are delivered to our office. This most commonly occurs when there are storms throughout the US and the package gets stuck in Memphis.

Can a Remote Closing Occur Anywhere?

We generally do not conduct remote closings if the buyer is outside of the continental United States. The reason is that the lender requires us to send them the original loan package no later than 24 hours after closing. We cannot meet that deadline unless the buyer is in a location where he or she can send the original loan documents to us within one day. As long as Fed Ex does its job, we can receive documents the next day from every US state but Hawaii.

Hawaii

While we technically can conduct a remote closing from Hawaii, there are many issues that must be addressed (all of which are out of our control). First, we must get approval from the lender to hold funding until we receive the original loan documents. As I mentioned above, funding generally must occur no later than 24 hours after the closing. Funding cannot occur until we receive the original documents in our office. Most lenders will not allow funding to be delayed.

Overnight delivery from Hawaii can take anywhere from three days to a week. Thus, if a lender allows us to hold funding until we receive the original loan documents then Hawaii is an option. The other component to a delayed funding situation is approval from the seller. The seller would have to agree to the delay and understand that interest will continue to run on his or her mortgage payoff until we have everything we need to fund the transaction.

While we love celebrating with the buyer and his or her Realtor (in person) on the day of closing, we know that it is not always an option. But with sufficient planning and teamwork, we can make the closing as smooth as possible for every buyer, whether they’re in our office or afar.