3.4 Indiana Closing Procedures

Who Conducts the Closing

Indiana is a title-company / escrow closing state for most residential deals, though attorneys are common in complex or commercial transactions. There is no statewide requirement that an attorney close a residential sale.

Federal TRID Timing

The TILA-RESPA Integrated Disclosure (TRID) rule governs most consumer-purpose mortgages and is heavily tested.

Trap: Correcting a seller credit or a small fee does NOT restart the three-day clock. Only an APR change beyond tolerance, a product change, or adding a prepayment penalty resets it.

"Business days" for the three-day Closing Disclosure rule means all calendar days except Sundays and federal legal holidays, so a disclosure delivered Monday allows a Thursday closing. The rule applies to most consumer-purpose closed-end mortgages secured by real property; it does not apply to all-cash deals, reverse mortgages, or commercial transactions, where the parties simply close when the documents are ready.

Title Examination

Before closing, the title company or attorney searches the public records, builds the chain of title, identifies liens and encumbrances, issues a title commitment, and clears objections (e.g., paying off an old mortgage or releasing a mechanic's lien). The buyer then typically buys an owner's title insurance policy, and the lender requires its own loan policy.

Title insurance differs from other insurance: it is a one-time premium paid at closing and protects against defects that already exist in the past chain of title (a forged deed, an undisclosed heir, an unreleased lien), not future events. The owner's policy protects the buyer's equity for as long as they own the property; the lender's loan policy protects the mortgage balance and shrinks as the loan is paid down. Standard exceptions (survey matters, the recorded easements you can see) are listed in Schedule B of the commitment, which the buyer should review before closing.

Deeds Used in Indiana

The type of deed determines how much the buyer is protected. Memorize the descending order of protection.

Exam Tip: A quitclaim deed can validly transfer full ownership — it just makes no promises. "No warranties" does not mean "no title."

Property Taxes Paid in Arrears and Proration

Indiana property taxes are paid in arrears in two installments, due about May 10 and November 10, for a prior assessment year. Because the seller has had the use of the property before closing but the taxes have not yet been billed/paid, the seller usually credits the buyer at closing for the seller's share.

Worked proration example

Assume annual taxes of $3,650 and a closing on April 1 (day 91 of a 365-day year). Daily rate = $3,650 / 365 = $10/day. The seller owes January 1 through March 31 = 90 days = $900, which appears as a credit to the buyer / debit to the seller. The buyer is responsible for the rest of the year and will pay the actual bills when they come due.

Recording and the County Sales Disclosure Form

After signing and funding, the deed is recorded at the County Recorder's Office in the county where the property sits, which gives constructive notice and sets lien priority (Indiana is generally a race-notice recording state). Before the auditor will endorse the deed for recording, the parties must file the county Sales Disclosure Form (SDF) under IC 6-1.1-5.5 and pay a $10 fee to the county auditor; the auditor uses it to update assessment data and process homestead deductions.

Note: Recording fees and any local conveyance charges change periodically — verify current county schedules, but for the exam know that filing the SDF and recording with the County Recorder are the two transfer-completion steps.