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Commercial Closings With Confidence

Updated: Jan 13

You spotted a commercial property that you want to buy and you can see the $$ signs already. Walk, don't run!

There are several steps you need to take before the commercial property is yours and looks can be deceiving, so take your time to do some research before making an offer.


The first step to a successful commercial closing is the title search. This involves hiring a title company to search the land records for the property you want to buy. You can learn a lot from land records! You will learn if there are issues with title, like encroachments, easements, restrictions, or ownership problems (maybe the seller-corporation went bankrupt or dissolved!). Issues like these can range from minor headaches that can be fixed to deal-breakers. A title search can be done in a few days and learning about title issues before before you make an offer can save you a lot of time and money.


Once you are satisfied with the title, you are ready to make an offer. Your offer should be in the form of a written contract. If you are using a commercial realtor, she may help you draft the contract. Even so, it is wise to have a real estate attorney review the contract before submitting it to the seller. You want to ensure that you are protected from unexpected problems that may arise once after inspect the property or gain access to financial information from the seller (is the property profitable, does it have high overhead, etc.). If you are not using a realtor, than a real estate attorney is even more important to avoid pitfalls.


After your offer is accepted by the seller you want to ensure you have an escrow agreement in place. Escrow is required to ensure both parties are serious and trustworthy about their intentions to purchase and sell the property. In escrow, a neutral third party, like a title company, holds funds in a separate account inaccessible to both the seller and buyer. These funds remain in the account until all the criteria in the purchase contract are met or one party exits the deal in accordance with the contract.

Commercial real estate transactions, in particular, are more strictly monitored by the escrow agent, buyer and seller during escrow. There are far fewer regulations to prevent either party from harming the reputation or financial security of the other, so each must protect their own interests and investments.


Each party participating in a sale must do its best to protect itself from issues with the sale. This process is called due diligence and includes the buyer's collection and review of documents that show that the commercial property is "as advertised" and is free from unexpected title issues. Both buyer and seller should perform their due diligence with their respective real estate lawyers to ensure every detail of the contract has been reviewed and substantiated. Finally, a savvy buyer requests proof of the seller's title insurance policy to protect itself from unexpected liens or defects in title that existed before the seller purchased the commercial property.


After you and the seller have completed your due diligence, the closing documents are ready to be signed and notarized. In addition to the title (deed) and title insurance policy, all existing lease agreements should be transferred, and a bill of sale that lists all fixtures and personal property to be transferred with the property should be signed by the seller. A title agent and real estate lawyer should review all documents one last time before signing to ensure nothing is wrong and nothing has been missed.


Commercial real estate transactions can be confusing to navigate and much more complex than a residential closing. It is important to hire an experienced title agent and real estate to attorney to help with the process. Pike Title and A. R. Pike Law Firm have closed commercial transaction ranging from a few hundred-thousand dollars to multi-million dollar transactions. Wherever your commercial closing falls in the spectrum, you can be sure that your transaction is in good hands.


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