What do I need to do to prepare to close out my servicing agreement?
When a lender gives you a loan and you pay it off in full, the lender would need to prepare and deliver a satisfaction of mortgage and release the lien. If the property was sold as a Bond for Deed or Land Contract, typically a Cash Sale is created at the original closing to be held with the Escrow Agent. This document is only filed once the loan has been satisfied.
What are prorations / other costs?
Real estate taxes, flood insurance premium (if assumed), rents, condominium dues, assessments, and/or other dues owed to homeowner’s associations and the like for the current year, are to be prorated through the date of the Act of Sale.
Proration means that they are paid on a proportional basis until the closing date. As an example, if you should pay $100 in the month of closing for insurance and the closing is on the 15th, then you would pay half of that amount because the closing happens in the middle of the month. That’s a prorated payment.
All necessary tax, mortgage, conveyance, release certificates or cancellations, and SELLER paid closing fees, if any, shall be paid by the Seller. The Seller shall also pay all previous years’ unpaid taxes, assessments, condominium dues, and/or dues owed to homeowner’s associations and the like. All special assessments bearing against the Property prior to the Act of Sale, other than those to be assumed by a written agreement, as of the date of the Act of Sale, are to be paid by the Seller.
