When Exactly Is a House Considered Sold?

When a house changes ownership, the question of “when is it truly sold” often arises. The process involves a series of distinct stages, each carrying its own legal and financial implications. Understanding these sequential steps clarifies the definitive points at which a property transitions from being available for sale to being officially transferred. This progression involves initial agreements, the fulfillment of specific conditions, a formal closing event, and finally, the official recording of the transfer of ownership.

Initial Agreement and Contract Execution

A house sale begins with an offer from a prospective buyer and its acceptance by the seller, forming the initial binding commitment. An offer specifies the terms under which a buyer proposes to purchase a property, including the price and any conditions. Acceptance occurs when the seller agrees to these terms, typically by signing the offer document, which then creates a legally binding contract between both parties. This agreement is commonly known as a purchase agreement or sales contract.

Upon signing, the property is generally considered “under contract.” At this stage, buyers often provide an earnest money deposit, a good-faith payment held in an escrow account. This deposit, typically ranging from 1% to 2% of the home’s sale price, or sometimes 5% to 10% in competitive markets. While legally binding, being “under contract” does not mean the house is fully sold, as the agreement is usually contingent upon several conditions being met before the final transfer.

Meeting Contract Contingencies

Following the execution of the purchase agreement, the sale enters a phase where various conditions, known as contingencies, must be satisfied. These clauses are integrated into the contract to safeguard both the buyer and seller, allowing either party to withdraw without penalty if specified terms are not fulfilled within a particular timeframe. Common contingencies include the home inspection, appraisal, and financing, as well as situations like the buyer needing to sell an existing home.

An inspection contingency grants the buyer the right to have the property professionally examined for defects. If significant issues are discovered, the buyer can request repairs, a price reduction, or even cancel the contract and receive their earnest money back. Similarly, an appraisal contingency protects the buyer if the property’s appraised value is less than the agreed-upon purchase price. Financing contingencies allow buyers to secure the necessary mortgage loan. If these or other agreed-upon contingencies are not met, the contract may be terminated, and the earnest money is usually returned to the buyer. During this period, the property’s status is often referred to as “pending” or “contingent.”

The Closing Process

The closing, also referred to as settlement, represents a significant milestone in the home sale transaction. This event involves the buyer, seller, closing agent, and sometimes their respective real estate agents and attorneys. During closing, numerous legal documents are signed to finalize the transfer of ownership and funds. These documents include the deed, which officially transfers the property; the mortgage or deed of trust and promissory note, which formalize the buyer’s loan obligations; and the Closing Disclosure, detailing all financial aspects of the transaction.

The final transfer of funds is a key part of the closing. The buyer wires the down payment and closing costs to an escrow account managed by a third party. Closing costs, which cover various services and fees associated with the transaction, range from 2% to 5% of the home’s purchase price for buyers. Sellers also incur closing costs, ranging from 8% to 10% of the sale price, which include real estate agent commissions and other fees. While the signing of these documents and the exchange of funds at closing feel like the definitive moment the house is “sold,” the legal transfer of ownership often awaits a subsequent step.

Deed Recording and Official Transfer of Ownership

The definitive point at which a house is legally considered sold occurs with the recording of the deed. After the closing documents are signed and funds disbursed, the deed is submitted to the local county recorder’s or registrar’s office. This act of recording makes the transfer of ownership a matter of public record, providing official notice of the new owner.

The county recorder’s office maintains permanent public records of documents affecting title to real estate. It is at the moment the deed is officially recorded that legal ownership transfers from the seller to the buyer. Deed recording often occurs on the same day as the closing or within a few business days. Once recorded, the buyer gains full legal possession of the property, including the right to receive keys and occupy the home, while the seller receives their final proceeds from the sale.