[WSBARP] When is closing?

[Andrew Hay]

Well I saw this scenario on my real property law school exam so I have dealt with this issue at least once before.

On first impression I would rather be the seller's lawyer.

Even if the deal hasn't closed there is no apparent breach of contract by seller so buyer is contractually bound to close.  Seller can still sue for specific performance or damages and get fees under the contract which will be significant.

As far as when closing occurs, usually contract language says when documents are recorded.  That hasn't occurred in your case.  Delivery to title is not recording.  The escrow agreement/instructions may alter this or maybe there is different language in the REPSA.  But I am not sure the transaction has closed if docs are not recorded.

If the transaction has indeed fully funded, the buyer can hold onto the money and the seller will have to pay the mortgage or face the consequences.

Title is in an uncomfortable position.  But in the underlying transaction it looks like the seller is in breach for withdrawing without a reason.


Andrew Hay
Hay & Swann PLLC
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Tacoma, WA 98418
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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rich Holland
Sent: Tuesday, December 1, 2020 11:53 AM
To: WSBA Real Property Listserv
Subject: [WSBARP] When is closing?

Interesting fact pattern - almost exam like - from an out of state colleague:

PSA says property is AS IS, with all faults, etc.  Seller will not repair, knows nothing of the property.  Buyer agrees.
Closing is set for Day 1 (just for simplicity).

Day 1     Escrow has Buyer and Seller docs, funds, etc. and sends docs out to record.
Day 2     Title receives but does not record documents due to cut off.
Day 3     County is closed
That night, massive windstorm comes and does significant damage to the deck on the property
Day 4     Buyer's agent contacts Title and forbids them from recording transaction
                Seller claims transaction is already closed and recording is ministerial and property is AS IS anyway
Day 5     Buyer's agent still blocking title and states that Buyer's insurance refused claim because Buyer wasn't the owner on the date of the storm.

Now, I have a number of thoughts about this but was curious about the collective wisdom.  Clearly, to me, if one removed the escrow company from the equation, ownership transferred on day 1 when S gave B the deed and B gave S the funds.  Recording has to do with notice; not effectiveness of a transfer.  I wonder, therefore, whether that is changed because of the neutral third party.  This also reminds me of the recent thread on here about when Closing actually occurs.  To me, B has no real claim against S regardless of Closing.  Either it was already B's or B had already contracted to purchase the property AS IS.  To be clear, I am not given to understand that the Buyer wants rescission or to cancel the transaction (depending on the interpretation of when closing occurs), but, of course, wants S to replace the deck which, of course, S is not going to do for B or anyone.

I am curious of your thoughts on this.  Was the transaction closed?  Did the title company do the right thing by refusing to record?  Does the S have some sort of claim against B since S remains the listed owner with the County for taxes etc.?  Given the incredible oversimplification and understanding that it depends on what the contract actually says, does B have a legitimate claim to halt the title company when S has already delivered the deed?  And, for that matter, when is "delivery" from S to B when an escrow is involved?

Suffice to say, I responded with more questions than answers.

Sincerely,

Richard L. Holland
WSBA#23921

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