There is a lot that goes into the steps in a commercial closing. Each step is important for executing the deal. Some steps are significant for protecting your interests.
This second post covers a few more steps in a commercial closing. The first part covered the letter of intent, title search, and title insurance. You can click here to read part one of this post.
With the title search complete and insurance in place, you can negotiate and set up escrow. With escrow, a third party holds the deposit of the buyer. Once all deal terms are complete, the third party will release the funds to the seller.
Escrow is an important part of the commercial closing process. Just like with a residential deal, it protects the financial interests of both parties. For the buyer, it is a safe place to put the deposit until the deal is complete. On the seller’s side, it is an assurance that the funds are available when the closing is complete.
Buyers need to be careful during due diligence. This step is when you investigate the property to make sure it is what it appears to be. With that said, there are many different types of due diligence. You will need to hire experts to perform different stages of due diligence.
One obvious form of due diligence is a physical inspection of the property. You hire a professional inspector to check the structure’s roof, foundation, and condition. Due diligence can also include a boundary survey or an investigation of zoning restrictions.
If the due diligence is clean and every other step goes smoothly, it is time to prepare the closing documents. The bill of sale and deeds are documents for any commercial closing. However, there can be several others depending on the circumstances. For example, there might be zoning disclosures, environmental reports, or warranties.
Usually, the seller prepares the documents and sends them to the buyer. If the buyer is satisfied with the terms, they can arrange to finalize the closing. This process usually involves the parties meeting to sign the documents. Along with a representative from each side, you will also need a notary to witness the signing.
Buyers and sellers need to protect their interests when closing on commercial property. That is why you should hire a title company or real estate attorney to help you through the process.
Reach out to the Title Group of Tennessee if you need help with a commercial closing. We are local experts offering complete title services in Tennessee.
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