Closing costs are fees and other costs that are calculated during the closing portion of a real estate transaction. These are monetary amounts that have been accumulated during the process of negotiating the sales transaction. These can include costs such as attorney fees, brokerage commissions and fees, costs of hiring an appraiser or home inspector, various tax fees, and other costs. Closing costs often make up about 2-5 percent of the overall sales price.
Closing costs can often involve thousands of dollars depending on the value of the property. For this reason, it can be common for disputes and legal issues to arise in connection with closing costs. For instance, closing cost disputes can often involve issues like:
- Misrepresentation of contract terms or value amounts
- Loan fraud and other types of fraud issues
- Dispute over local laws and which laws to apply
- Conflicts over which professional was hired (for instance if there is a dispute regarding a property appraiser)
- Disputes over a good faith estimate (i.e., and estimate of the closing costs, which is calculated at the beginning of negotiations)
Many other issues can arise involving closing costs. Closing costs must be agreed to in a document called a settlement statement (HUD-1). This document can also be a source of legal dispute, such as when one party falsifies information in an HUD-1.
Disputes over closing costs can often involve some highly detailed and somewhat technical aspects of real estate laws. Disputes often require an in-depth analysis of the real estate contract, settlement statement, receipts, and other documents.
If you have been involved in a dispute over closing costs, you should begin gathering documents that might be relevant to the claim. These can include loan contracts, appraiser and broker documents, tax records, and other documents.
Many closing cost disputes may involve contract principles, so it may be necessary to work with a lawyer. Disputes can also be prevented or minimized by hiring a lawyer to help with the negotiation and closing process. Some closing cost disputes need to be resolved in a court of law.
Closing costs can often involve several thousands of dollars in fees and expenses. It may be in your best interests to hire a real estate lawyer if you need any help with closing costs or other issues in a real estate transaction. Your lawyer can help represent you during negotiations and other stages of the process. Also, if you need to appear in court, your attorney can help you file a claim and can represent you during court meetings.