Buying or selling commercial real estate can be a complicated transaction. While electronic communications make it easier to communicate progress, they also make it harder to keep track of all the moving parts in the days leading up to closing.
Follow our tips below to ensure a smooth closing in your next real estate transaction.
Be mindful of the closing date
In a purchase and sale agreement, a closing date is usually set a certain number of days in the future (e.g. 30, 60, or 90 days). This gives parties time to perform their due diligence before closing.
When determining the actual closing date, the business day closest to the end of the stated time period is usually selected. Before agreeing to a pre-determined closing date, keep these issues in mind:
- Avoid closing on a Friday: If your 60-day timeframe ends on a Friday, consider moving the closing day up to Thursday. While the buyer, seller, attorneys and agents will be focused on the transaction, third parties may not. Fridays are a popular day for office workers to take vacation, and those who are in the office may not be as focused on details as they would be earlier in the week. If you need a last-minute bank wire or insurance detail, you may not get what you need until the following week, thereby delaying your closing.
- Avoid closing on a Monday: For the same reasons to avoid closing on a Friday, avoid closing on a Monday. Third parties may still be on vacation or may be playing catch-up, causing your request to land at the bottom of the pile. Closing after the weekend may mean the buyer, seller, or agent hadn’t been thinking about the deal for a few days, and there may be a mad dash to correct an oversight.
- Set closing ahead of deadlines: When making adjustments for the considerations above, always set the closing date before deadlines. Also keep in mind deadlines like a tax exchange deadline, and set your closing date a few days before to allow time for corrections.
Make yourself available before closing
Where possible, block off your calendar in the days before closing to make yourself available for last-minute tasks. You’ll likely need to approve revisions, answer questions, gather documents and other tasks to finalize the purchase. Make sure you’re easily available via phone or email. If your availability is limited, communicate when you are free to your attorney and provide alternate methods for others to reach you.
Just as you need to make yourself available before closing, you should also be mindful to be more responsive. Closing documents go through several iterations of revisions, requiring all parties to approve changes. If you aren’t reviewing communications in a timely manner, additional delays may result. Be polite and keep the closing running smoothly by making an extra effort to be responsive.
Prepare for the worst
Even if you’re worried the deal may fall through, you need to be able to show you were ready to complete the transaction. Have all necessary paperwork completed ahead of the closing date. If you need signatures from other parties but haven’t received them, have a paper trail of your efforts to get those signatures.
A real estate attorney can walk you through the process of closing a commercial real estate transaction. Contact a skilled real estate attorney at BoltNagi PC today.
Steve Hardy is an attorney in the Real Estate & Financial Services Practice Group at BoltNagi PC, a full-service business law firm on St. Thomas, U.S. Virgin Islands.