Getting Paid at Closing Without Getting Stuck

Why this matters

"We'll pay you at closing" is a sensible offer from a seller who is short on cash until the sale funds, and it is how a lot of pre-sale repair work gets paid. It is also how a shop ends up carrying a finished job for three months, because the closing slipped twice, the title company never received the invoice, or the deal died and the seller now says the repair was the buyer's idea. Being paid from closing proceeds is safe when it is set up as a written instruction to the closing office, signed by the owner, with a backstop date that does not depend on the sale. It is unsafe when it is a verbal promise relayed by an agent.

This article owns the payment side. Scoping and signing the quote is covered in Quoting a Repair Request Under a Closing Deadline, and what to do once a sale has already collapsed is covered in The Sale Fell Through After the Work Was Done.

Who actually pays you at closing

The closing office. Depending on your state, the sale is closed by a title company, an escrow company or a real-estate attorney. Western states lean on escrow companies; attorney-closing states such as New York, Massachusetts and Georgia run closings through a lawyer's office. Whoever it is holds the buyer's money and the loan funds and pays everyone listed on the settlement statement, the itemized sheet of who gets what. On a financed purchase the buyer's side of that sheet is the Closing Disclosure the federal TRID rule requires; the seller's side may be its own statement.

From the seller's proceeds, on the seller's instruction. You are paid as a line in the seller's column: "Repair - Your Shop Name, paid from seller's funds." The closing office only adds that line when the seller tells them to, in writing. An invoice you email to the title company with no seller instruction attached is a piece of paper they are not allowed to act on, because paying you reduces the seller's check.

Not the buyer, and not the agent. The buyer has no authority to direct the seller's money, and an agent cannot add a payee to a settlement statement. If an agent says "I'll get you on the statement," what they mean is that they will ask the seller to sign the instruction. Make sure someone does.

The steps

1. Agree the payment method in the quote, before any work

Put the payment terms on the face of the quote: "Payable at closing from seller's proceeds per signed payment authorization, or within 30 days of completion, whichever comes first." The 30-day backstop is a common starting point; tune it to your terms, but do not leave it out.

Why. Without the backstop your invoice is due "at closing," and if there is no closing it is due on a date that never arrives. With it, a dead deal turns into an ordinary overdue invoice owed by the person who signed the quote.

What breaks if you skip it. You end up arguing about whether the seller ever agreed to pay outside of a sale, which is a much weaker position than "payment was due on day 30."

2. Get the seller's signed payment authorization

This is a one-page letter from the seller to the closing office: "Please pay [Your Shop] the amount of the attached invoice from my proceeds at closing. File number [x]. Property [address]." Signed and dated by every owner on title. Many title offices have their own form; ask for it rather than writing your own.

Why it must be the owner. The closing office will match the signature against the people on the deed. A spouse who is on title and did not sign can hold up the line.

What breaks if you skip it. The title office drops your line, or calls the seller on closing morning to confirm and the seller cannot be reached. Either way the deal closes and the money goes out to the seller instead of you.

3. Deliver invoice plus authorization to a named person

Send both to the escrow officer or closer by name, with the file number in the subject line, and ask for a reply confirming receipt. Get the officer's direct line. A common starting point is to deliver no later than 5 business days before the scheduled closing.

Why that early. On a financed purchase, the lender has to deliver the Closing Disclosure to the buyer at least 3 business days before consummation under 12 CFR 1026.19(f). A late change to the seller's column does not usually restart that three-day clock, which is triggered by a narrower set of changes such as the annual percentage rate becoming inaccurate, but the closing office still has to rebalance the statement and often get lender sign-off. Closers are juggling dozens of files the last week before closing, and a line that arrives in the final 48 hours is the one that gets missed.

What breaks if you skip the receipt confirmation. "We never got it" is the most common reason a line is missing, and you only find out after funding.

4. Confirm the line is on the statement

Two or three days before closing, call the officer and ask: "Is our line on the seller's statement for file [x], and for what amount?" Some offices will email you the excerpt; many will just confirm verbally. Write down who told you and when.

5. Track the closing date, and invoke the backstop when it slips

If closing moves, the authorization usually survives because it is tied to the file, not the date. Confirm that with the officer each time. Your backstop date does not move. On the day it passes, invoice the seller directly.

Why. Closings slip for reasons nobody in your shop can affect: an appraisal, a buyer's loan condition, a title defect. Every slip is a week your money sits in someone else's deal.

6. When to refuse payment at closing and ask up front

Some files are not worth the wait. Ask for payment on completion, or a deposit before you start, when any of these is true:

• The materials cost is a large share of the ticket, say more than half, so you would be financing parts as well as labor.
• It is a short sale, where the seller's lender must approve every payment from proceeds and can strike your line after the work is done.
• The owner is out of state, an estate, or a lender, so the authorization will be slow or must come from someone else. See related: Estate and Probate Homes, and Bank-Owned and Preservation Work.
• The deal already looks shaky: a second extension, a renegotiated price, or the buyer's agent asking for "just a quote" without a signed addendum.
• The seller will not sign the backstop. That is information about who they expect to bear the risk.

7. Know what you fall back on

If the deal dies, the escrow office pays nothing and returns everything; your claim is against the seller under the quote they signed. Every state also gives contractors some form of mechanics' lien, a claim recorded against the property for unpaid work, but the notice and filing clocks vary a great deal by state and start running when you finish, not when you find out the sale failed. See related: The Sale Fell Through After the Work Was Done for those clocks.

This is not legal advice; if a closing office refuses to honor a signed authorization, or the seller revokes it, talk to your attorney before the house changes hands.

Worked example: a closing that slipped twice

The job. A garage door repair on a listed home: broken torsion spring and a bent track section, flagged by the buyer's inspector. Quote signed by both owners on day 0 with "at closing or 30 days from completion, whichever first." Scheduled closing: day 21.

Day 4. Work complete, 3.0 hours on site. You send the invoice and the title company's payment authorization form to both owners. One owner signs on day 5; the other is traveling and signs on day 9.

Day 9. You email invoice plus both signatures to the escrow officer by name, file number in the subject. That is 12 days before the scheduled closing, well ahead of the 5-business-day target. She replies "received" on day 10.

Day 17. The buyer's lender adds a condition and closing moves to day 30. You call the officer: the authorization is attached to the file and stays. Your backstop is day 34, 30 days after completion on day 4, and it does not move.

Day 27. Closing moves again, to day 41, because the appraisal came in low and the price is being renegotiated. You note the backstop, day 34, now falls before closing.

Day 34. Backstop passes. You invoice the owners directly, referencing the signed terms, and tell the escrow officer you have done so, so she can remove the line if they pay you direct and nobody pays you twice.

Day 38. The owners pay directly rather than wait. You email the officer to withdraw the authorization, and she confirms the line is removed. The sale closes on day 41 without you on the statement at all.

Reading the example. The 30-day backstop turned a 37-day wait into a 34-day one and, more important, made the payment independent of a deal that was by then renegotiating price. If the backstop had been missing, your money would have been tied to day 41, and if the renegotiation had failed, to nothing. The withdrawal on day 38 matters too: a stale authorization left on the file can lead to a second payment that you then owe back.

What would have changed the call. If the appraisal problem had shown up before the work instead of after, step 6 applies: a renegotiating deal is a shaky deal, and you would have asked for payment on completion.

How to verify it is set up right

Before closing week, you should be able to answer all of these from your own records, not from memory:

• the escrow officer's name, direct line and the file number;
• the date she confirmed receipt;
• a copy of the authorization signed by every owner on title;
• the backstop date, written on the job;
• a note of who confirmed the line was on the statement, and when.

If you cannot answer one, that is the gap a missed payment will come through. In your job record, keep the authorization and the officer's confirmation as attachments on the invoice, so whoever chases it later is not hunting through an inbox.

References

• Consumer Financial Protection Bureau, TRID rule, Closing Disclosure timing, 12 CFR 1026.19(f)
• American Land Title Association, settlement statement practice
• Your state's mechanics' lien statute and contractor licensing board
• See related: Quoting a Repair Request Under a Closing Deadline
• See related: The Sale Fell Through After the Work Was Done