Commercial Real Estate Closing List

SAN ANTONIO - Nov. 16, 2015 - PRLog -- Per Bruce Myles, owner and founder of Proactive Commercial Lending Group, LLC,"As we learned in one early 90’s movie drama, in the world of real estate, sales professionals should eagerly observe and practice their ABC’s, and, always be closing. Off the silver screen and into the real world of the commercial real estate industry, things are quite different. Though there is a definite drama component and some anxious moments, it’s largely uneventful.

The reality can easily morph into complacency and things can be missed. This is especially true at settlement time. Unlike residential real estate, where closings are generally handled by title companies, commercial real estate settlements are typically transacted by attorneys. An eye for detail is a must to ensure there are no loose ends, since there are many line items to go over. Here’s a helpful commercial real estate closing checklist for reference:

1. The promissory note.

2. Personal guarantees (these can be partial or total and are generally required by the lender).

3. The loan agreement.

4. The mortgage.

5. Lease and rent assignments.

6. Security agreement.

7. The Uniform Commercial Code-1 or financing document.

8. Borrower’s good standing and borrower’s ability to repay.

9. Title insurance.

10. Land title survey.

11. The rent roll.

12. Certified copy of all current leases in the building.

In addition to these there will also be a lessee estoppel certificates, attorney agreements, non-disturbance and lessee subordination, lien searches, an appraisal, environmental impact study/statement, site improvement study, proof of hazard insurance, underwriting documents, borrower’s attorney’s legal opinion, and an errors and omissions agreement, or, compliance document.

As you can see, this checklist is quite extensive and every document must be thoroughly reviewed by the closing facilitator. Each item on the checklist is important to to a successful settlement and copies should be furnished to all interested parties.

It’s also important to keep in mind these transactions are typically business related and there are many parties which do not participate in the closing. Unlike residential real estate, which is less complicated, only involving two parties, commercial real estate can have multiple parties. These can be a group of private investors, a real estate fund (real estate investment trust or REIT), commercial organizations, not for profit and nonprofit entities, as well as other parties.

In addition to this, mistakes made or uncovered during commercial real estate closings can easily take weeks or even months to resolve. It’s clear that commercial real estate transactions are quite complex and have requirements that are not found in residential closings. Therefore, it’s best to review the settlement documents ahead of the actual closing to ensure a smooth transaction.

Proactive Commercial Lending Group, LLC was formed back in 2003 by Bruce Myles with the thought that many good, hard working business owners were not getting the Banking Services they needed to survive,  maintain and grow their business. This was due to the restrictions on banks (FDIC) or banks not willing to take a chance on their own customers and communities (or Lazy Loan Officers)!