What Happens At The Closing Of A Commercial Real Estate Transaction?
The seller’s and buyer’s representatives are present. If we want to talk about pre-COVID, there is a host of people. However, now it is just the attorneys, the title company, and the representative from each side. Then the title search is run right up until the moment of closing, and it’s known as the continuation search to ensure nothing popped up “overnight” and money passes across the table. If there is financing going on with the purchaser, they are signing their loan documents and working with their bank, and at the end of the process, either checks or wire transfers are made, title (the Deed) is passed, keys are transferred, and the transaction is then considered closed.
As The Attorney, Are You Generally Present At The Closing?
We are present 100% of the time for either side.
What Are Some Common Delays That Could Hold Up The Closing Of A Commercial Real Estate Property?
One is an unknown judgment or lien against the seller, federal tax lien or something of that nature, unemployment insurance lien, or a significant violation of some sort emerges. The contracts are often subject to what the certificate of occupancy reflects, but it is about a 50/50 split on that. Also, there are times when you have a seller that is indicated on the contract. You get the title report in, and you find out that the seller either does not own the property outright or there are additional undisclosed owners. However, this does not always indicate fraud.
If the actual identified seller in the contract is inconsistent in the records, amendments need to be made to the contract. Sometimes there are other parties involved, sometimes it’s held by numerous parties, you’ve only dealt with one party, and there could be a problem between the owners. These are all things that can hold up the closing or, conversely, could derail the closing to where the whole transaction may fail.
Can Either Party Pull Out Of The Contract At Any Point Before The Deal Is Finalized?
Absolutely! All deals, even though there are memorandums of understanding, letters of intent, or binders. Any time before a contract is signed and a contract deposit tendered, either party can pull back. It’s not binding until the execution of a contract and the passing of consideration, that being the contract deposit.
What Role Does Your Firm Play In The Closing Of A Commercial Or Industrial Real Estate Deal?
We intend to be the eyes, ears, and brains representing either party. I ensure that they get the benefit of the bargain in the transaction. If you are selling, you get your selling price, and if you are purchasing, you get the benefit of the property you expected to buy.
What Is The Difference Between A Real Estate Broker And A Real Estate Attorney In New York? Do I Need Both?
Real estate brokers assist in the marketing and sale and bringing about the meeting of the minds. That is the broker’s job to bring the parties together. As for the real estate attorney, it is to make sure that whatever was on the meeting of the minds is memorialized correctly in the contract, and the parties’ legal obligations are then established and outlined in the contract which governs the deal.
What Pitfalls Do Businesses Face In Trying To Handle A Real Estate Transaction Without An Attorney?
The pitfalls are that real estate is not an easy endeavor, especially in the commercial environment. There are too many issues that can pop up, and that only experience will allow the client to be adequately represented so that they can navigate various matters. There is no such thing, as they say, a plain vanilla deal. Every commercial deal, especially in New York, has issues, and only an experienced attorney can work through them. If an unspecialized attorney occasionally attempts a real estate deal, they will not know how to navigate through the issues or adequately counsel their clients about the risks involved. Sometimes, there may be issues because the client wants the property for inherent problems. It could also be a regulated property where there are government regulations that cause roadblocks.
You have to have the right experienced attorney to navigate all the steps and all the issues that come up because it is not easy. It is time-consuming, and you have to have the skillset.
Do Your Clients Generally Hire Your As A One Time Thing Or Do They Retain Your Services As An In-House Counsel?
I prefer to be retained per transaction, whatever the fee arrangement is that we come up with. When the transaction is done, I can mark the time that I started it on Day A and ended it on Day B. So, I can say this was the scope of my representation. Then, if they want to keep me on for future items, those will be separate retainers.
For more information on the Closing Of A Commercial Real Estate Transaction, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (212) 697-7515 today.
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