Investing in commercial real estate is not an easy decision to make and should be done so seriously. The process can be lengthy at times and does not happen quickly. You will want to know what to expect along the way, which is why we have put together this little guide about the closing process for commercial real estate.
As with most real estate purchases, a neutral third party will be involved to act as the escrow company. This third party will follow the terms of the contract, local standard practices and instructions from the lender to get the deal completed. Once due diligence is finished, the escrow company will take the funds from the property purchaser and then make sure the title is legally transferred from the seller. The escrow company will then give the funds to the seller.
There is a big difference between buying residential property and commercial property; most parties buying commercial property do so as legal entities. This includes LLC's, corporations and partnerships. The escrow company will need to ensure that the parties signing the contract are legally permitted to do so. Some might need approval from a board of trustees or directors, while others could require letters of authorization.
Purchase contracts in commercial real estate sales are typically tailored to each sale and not standardized like residential sales. Most of these commercial contracts will also include bills of sale and other contracts. The additional contracts and bills of sale could be for any of the following:
-- Equipment service contracts
-- Existing leases for tenants
-- Bills of sale for personal property
-- Bills of sale for equipment
Most of the closing process is handled by the escrow company brought into the transaction. This includes scheduling times to sign documents, submitting paperwork to lenders for review, preparing the deed and bills of sale and submitting deeds to the county for recording.
Visit our site today to learn more about commercial property closings and how you can go about purchasing such property.