By Michele McCaskill
VP of Risk Management
The question of whether or not a buyer’s agent should remove keys from a lockbox and take them to closing is one that continues to be asked. And while there are many different viewpoints on the issue, the Association/Canopy MLS had no specific written “rule” on the topic, until recently.
Most prudent buyer’s agents have stated that they will never remove the keys from the lockbox and take them to closing attorney’s office unless they first speak with the listing agent and get permission. In some instances the listing agent is appreciative of the help. However, other listing agents prefer the buyer’s agents do not take the keys out of the home before the property is legally transferred to the buyer.
But doesn’t the buyer own the home after all the papers have been signed? Hopefully all of you know that the answer to that question is a resounding NO!
To legally transfer a property from one owner to another, specific steps must be taken. Those steps are outlined in Section 1(m) of the North Carolina Standard Form 2-T (“Form 2-T”). Until legal transfer has occurred, the transaction is not complete and the buyer does not own the property.
But don’t listing agents and buyer’s agents pass keys to buyers at the “closing” table? Unfortunately, they do.
Should they? The short answer is NO!
The reason? Risk of loss.
Anything could happen between the time papers are signed at the settlement table and the deed is recorded.
“Settlement” is defined in Form 2-T as the date in time where all the documents necessary to complete the transaction are executed and delivered to the closing attorney, which include the settlement statement, deed of trust and other loan or conveyance documents as well as the closing attorney’s receipt of the funds necessary to complete the transaction.
Section 12 of Form 2-T cautions agents that any loss or damage or other casualty prior to closing “shall be upon the Seller.” The “Closing” as defined in Form 2-T is “the completion of the legal process which results in the transfer of title to the Property form Seller to Buyer.” Until the “closing,” the seller remains the “owner” of the home.
While the buyer may terminate the contract if improvements on the property are destroyed or materially damaged prior to closing, if the buyer elects not to terminate, the buyer is entitled to receive any of the seller’s insurance proceeds related to that damage or destruction.
All agents are cautioned against supplying a buyer with house keys or other access tools until the deed has been recorded and the “closing,” as defined in Form 2-T, has been completed.
For these reasons, Canopy MLS adopted the following new rule to prohibit buyer’s agents from removing house keys, garage door openers, lockboxes, etc., without first contacting the listing agent and getting express permission. A violation of this rule carries a $500 fine.
SECTION 2.4: UNAUTHORIZED REMOVAL OF KEYS FROM LOCKBOX: The unauthorized removal of keys from a lockbox without the permission of the current listing brokerage, even for the purpose of taking the keys to settlement, is a violation. You must be the current listing broker or have the current listing broker’s permission to remove keys from the listed property. An infraction of this rule is a Category III violation as described in Section 9.4.3 and carries a fine.