Considerations in Commercial Real Estate Closings

Purchasing commercial real estate isn’t as simple as getting a mortgage and signing some papers. Even after your company’s offer has been accepted and you have secured your financing, there are still several concentrations in a commercial real estate closing. From the paperwork to procedures, having an experienced commercial real estate attorney by your side can help streamline the process and ensure your business takes possession according to the terms of your purchase agreement.

Unique Considerations in a Commercial Real Estate Closing

Commercial properties can come in many forms and serve many purposes. This means that the process of purchasing or selling commercial real estate has far more factors that can affect the closing process. Depending on the type of property involved, and the terms of your agreement, this could include:

Multiple buyers or sellers:

While residential real estate transactions usually occur between one person or married couple and a second person or married couple, commercial real estate purchases require multiple business partners and shareholders. This can complicate the preparation and execution of closing documents, especially when multiple shareholders need to participate in the signing.

Choice of entity:

If you are the buyer, we can help you decide how best to minimize your personal liability, including by creating a corporate entity or limited liability company to hold title.

Financers and lien holders:

Because the purchase price of commercial real estate is usually far higher than most residential property, there may be multiple loans, financers, and investors whose interests have to be secured or satisfied in the sale. This can bring additional considerations to commercial real estate closings as the parties must sign or satisfy multiple liens and securities on the property.

Due diligence investigations:

Investigating the details of a piece of commercial real estate is a necessary consideration in advance of closing. Both buyers and sellers will need to investigate the property and the other parties involved to identify any defects, needed repairs, vulnerabilities, or legal liabilities to be addressed. Doing one’s due diligence prior to closing will avoid unexpected surprises after the sale is completed.

Regulations and local ordinances:

Depending on the location of the commercial real estate and the intended use, there may be a variety of regulations and local ordinances that have to be complied with to prevent harm to the buyers’ customers and the general public. This includes restrictive covenants in the commercial deed itself, as well as local zoning ordinances and restrictions on property use. Buyers should take time to investigate the relevant rules and regulations before closing to ensure their use will follow local laws and industry regulations. If any variances or rezoning is needed, you should know that before the deal is done.

Land surveys:

Buyers can benefit from obtaining a land survey, even if not required to complete a commercial real estate closing. A land survey can provide a wealth of information for the buyer, disclose encumbrances and easements, and address issues that need to be resolved prior to closing.

Complex contracts and deadlines:

Commercial purchase agreements are generally more thorough and complicated than residential real estate contracts. They may include use restrictions and stipulations. They may also be paired with other commercial conveyances for equipment or business interests, include multiple parcels, and impose requirements for construction and improvements prior to closing, together with deadlines. We track such deadlines and other requirements and do everything possible to keep the transaction on track and moving forward.

Complex title searches:

A successful commercial real estate transaction depends on the property having a marketable title. This involves conducting a title search and satisfying yourself and your lenders that the chain of title is complete and there are no unsatisfied claims on the property. Residential title insurance is complicated enough, but because commercial real estate transactions involve more parties of various types, there are more factors to investigate and more types of information to go through before a commercial real estate closing can be completed.

Retaining a Commercial Real Estate Closing Attorney

While all real estate closings are highly technical, and could not conclude without lawyers, commercial real estate closings are more so. Our goal is to make the transaction move along as swiftly and smoothly as possible by proactively making sure all the considerations in commercial real estate have been satisfied and the documentation is all in place.

At Lawrence & Jurkiewicz, we focus our various practice areas on helping people. We know how to help entrepreneurs and business owners obtain property in Connecticut, too, by anticipating the many considerations in commercial real estate closings. Our real estate attorneys will meet with you to review your purchase agreements and business interests, perform due diligence, and see the closing to completion. Please call (860) 264-1551 or contact us for a consultation.