If you’re buying investment property, one of the most common questions is, what does the closing process actually look like and who handles it?
The first thing to understand is that the closing process can look very different depending on what state you are in. In Pennsylvania and Maryland, the process is generally fairly expedited compared to some other states.
But regardless of location, there are a few standard parts of the process that almost always happen when a property changes hands.
The Title
Whenever you purchase a property, there has to be a title check to make sure you are legally buying the property and receiving clear ownership.
Along with that, there is usually title insurance involved. If you are getting a loan on the property, title insurance is almost always required by the lender.
Typically, the company that is researching the history of the property and verifying legal ownership is also the company conducting the closing itself. In many cases, that is the title company.
Interestingly, the cost of title insurance is regulated at the state level in Pennsylvania and Maryland. That means pricing is generally the same whether you use an attorney’s office or a title company.
As part of the title insurance cost, the title company usually handles the closing services as well.
Title Company Duties
The title company’s job is much bigger than simply handing over paperwork.
They collect funds from the lender and all parties involved. They gather contact information, verify ownership history, prepare the new deed, and coordinate the signing process.
On closing day, everyone signs the documents, and then the title company distributes all of the money appropriately.
They are also responsible for making sure lienable items are paid properly. That includes things like unpaid taxes, municipal utility bills, or other obligations that could create a lien against the property.
For example, the title company will contact the local tax assessor’s office to verify whether taxes have been paid. If taxes are owed, those amounts are collected and paid at settlement so the new owner does not inherit unpaid obligations.
The same process applies to mortgages and other liens. The title company verifies satisfactions and makes sure anything attached to the property is addressed before ownership transfers.
The goal is simple. The buyer should receive full and clear title without unexpected encumbrances attached to the property.
Notaries
Another standard part of the closing process is notarization.
Documents like deeds must be signed in front of a notary so there is verification that the person signing is actually who they claim to be. That service is typically provided through the title company as part of the closing process.
In many transactions, especially with investment properties, one of the parties may live out of state. When that happens, the title company will often prepare a package of documents and mail them out for signature.
The buyer or seller then signs those papers in front of a local notary and sends the completed package back to the title company for processing and distribution of funds.
Digital Closings
Virtual closings and digital notarization are becoming more common, although the technology is still catching up in some areas.
Some states allow a buyer or seller to appear virtually in front of a notary, verify their identity through video and identification documents, and complete the notarization digitally.
The challenge is that not every county has the ability to process digitally notarized documents yet. Even if state law allows it, local recording systems may not fully support it.
That is why most closings today are still handled primarily in person, although digital closings are likely part of the future of real estate transactions.
Final Thoughts
The real estate closing process is designed to ensure that ownership transfers cleanly, funds are distributed properly, and buyers receive clear title to the property. Title companies play a major role in coordinating the process, resolving liens, handling documents, and making sure everything is recorded correctly.
Many investors we work with appreciate understanding how the closing process works before they get to settlement day. If you are looking for investment property in Pennsylvania or Maryland, reach out to us. We are always happy to help guide you through the process.
