preclosing

Preclosing is the period in a real estate transaction between the signing of a purchase agreement and the closing, during which parties perform due diligence, satisfy conditions, and prepare documents needed to finalize the transfer of ownership. The exact activities and timing are governed by the contract and local practice. Key conditions often include financing approval, clear title, completion of inspections, and fulfillment of contingencies.

During preclosing, the lender underwrites the loan, an appraisal is conducted, a title search is performed, and title insurance is arranged. The escrow or title company prepares settlement statements, and the parties review closing documents such as the deed, mortgage, and disclosures. Prorations for taxes and rents, and arrangements for homeowner's insurance and earnest money are finalized. Any required repairs or stipulations from inspections are addressed.

The process involves the buyer, seller, lenders, real estate agents, and a settlement agent or attorney. Delays may occur due to financing issues, title problems, inspection findings, or missing documents.

Preclosing is distinct from closing, which is the act of transferring ownership and recording the deed. In some jurisdictions, the term preclosing may refer to a separate appointment where documents are signed ahead of the actual closing date; in others, the term is used to describe the entire period before closing.