Closings for commercial real estate properties in White Bear Lake ans the surrounding areas can be a challenge. Buying a new property can make it difficult to focus on the many details. However, these details are essential.
Each commercial real estate closing is unique, but there are general steps that must be followed. A knowledgeable real estate attorney will ensure that none of these factors are overlooked, but it’s worthwhile to stay informed of the process.
Our checklist outlines the stages and factors that come into play during commercial real estate closings in the Twin Cities area.
Buying property isn’t just about paying the listing price. Commercial properties can come with costly closing costs. Expenses such as these should be planned for and budgeted during the whole process. At the time a possible buyer might make an offer, the amount of money needed for closing is not usually known in advance, but the amount should be estimated.
The buyer should still expect these costs to top thousands of dollars despite the fact that an attorney can work with lenders to try to keep these costs as low as possible.
There are numerous uses for commercial buildings and they typically have many tenants. In addition, operating statements for the previous three years should be provided if the property was used for a singular business.
Maintenance and planned improvements should be documented and in the hands of the buyer. Encumbrances, easements, and anything else that will affect the property should also be documented.
An escrow agent is a neutral third-party to the transaction who holds funds until the transaction is complete, or one party pulls out of the deal. Both the buyer and seller must agree to the terms of the escrow agreement before closing.
Under the escrow agreement, specific details such as the identity of the escrow agent are outlined, as well as the amount of funds held in escrow and acceptable use of the funds by the agent.
All factors in a transaction are the responsibility of the buyer. A closing process for a White Bear Lake, MN commercial property can be affected by everything that precedes it. The buyer is responsible for anything not found before the papers are signed. This includes:
- The seller
- Various obligations needed to satisfy the agreement
- Zoning restrictions
- Legal liability
A thorough inspection of the property is important. As we mentioned previously, any problems with the property will become the responsibility of the buyer once the sale has been closed. Expensive repairs found before closing can be a reason for negotiations.
With commercial real estate closings, a title commitment can supply the following critical information.
- The county where the property is located
- Property value for title insurance purposes
- Tax information
Additionally, a title will display any unreleased or open mortgages, as well as any past or present legal issues related to the property. A description of the property’s features is also included.
Environmental Site Assessment
One more report that is put together prior to commercial real estate closings is an environmental site assessment. An environmental site assessment outlines what environmental impacts a property might have.
Environmental issues can be a liability for the buyer.
In the initial phase of an environmental site assessment, tests of the soil, water, and air are generally not performed. In the event problems are found in the initial review of the property, a second phase of the assessment may be required. Phase two of the assessment takes a closer look at the environmental deficiencies initially identified on the property.
In addition to a deed, there may also be sworn and signed warranties accompanied by the deed. These guarantees can be used to prove that the seller is legally permitted to sell the property.
The type of deed used depends on the circumstances of the transaction. The warranties provided by the seller to the buyer vary. Documents can be as short as one page or as long as several pages. Since these are legally binding documents, an attorney who specializes in real estate usually prepares them.
Cities Title Services can provide you with additional information. Give them a call today.