A commercial real estate closing can be tricky. Some settlement companies won’t even bother to handle a commercial transaction, and if they do, they charge outrageous rates. At Blue Ink Original, we are not afraid of commercial transactions, large or small. We take them on with gusto! Whether you are purchasing commercial real estate or refinancing, close with Blue Ink Original so that you can benefit from our fair rates and years of experience. Once you sign the contract to purchase your commercial property, let Blue Ink Original coordinate the rest.
First, we will conduct a thorough title search on the property. Real estate agents and lenders rely on us to manage closing dates and handle the final disbursement of funds. We will coordinate with the lenders in order to ensure the closure of the seller’s loan and the onset of your loan. We will review your purchase contract to ensure that all terms are met and prepare your settlement statement (HUD-1). We provide both the commercial lender and the property owner with title insurance.
Commercial Real Estate Closing and Residential Real Estate Closing – the Difference
Normally, commercial real estate is owned by an entity—a corporation or LLC. Well, who is that entity? When conducting a residential transaction, all we need is the seller/borrower’s driver’s license to prove the identity of the person conveying or encumbering the property in order to verify that he is the property owner. But with a corporation, we must review all of the corporate documents to make certain that the correct person has the authorization to encumber or convey the real estate on behalf of the corporation.
With a standard residential transaction, a title search must go back 40 years. With commercial, we are required to search an additional 20 years back in time (60 years total). Additionally, because prior ownership may also have been commercial, we must be certain that the proper parties conveyed the property all the way back through the chain.
In order to complete a commercial real estate closing, we must also consult with the zoning authorities, the State Corporation Commission, and surveyors. Commercial real estate has different survey requirements that must be met.
How many people are involved in a commercial real estate closing? A lot more than are involved in a residential transaction. There are usually several corporate parties involved, several bankers, and a team of attorneys. Keeping all parties happy, informed, and on schedule is a real challenge!
It’s tough, but nobody knows it like us! We look forward to the challenge and our team has the experience and expertise to ensure a smooth transaction. We are, after all, the “Original.” Working with a company that lacks commercial experience will certainly delay the process and frustrate all parties involved, but Blue Ink Original will get it done and get it done right!
Commercial Real Estate Closing Checklist
Before you begin the commercial real estate loan process:
- Make certain you are claiming all of your business and personal income on your tax returns. Failure to do so is not only a violation of tax law, but your lender cannot count income that cannot be verified by your tax returns over several years.
- Work with a trusted CPA to generate annual income statements and balance sheets.
- Generate and maintain articles of incorporation, by-laws, general or limited partnership agreements, articles of organization, and an operating agreement.
- Consult with a trusted attorney to decide how to structure your loan. Do you want to create a separate entity for real estate or keep it under your current business umbrella?
Once you’ve begun the commercial real estate loan process:
- Plan on the process taking 45-60 days.
- Choose a trusted lender.
- Choose a trusted title company such as Blue Ink Original. Remember, you have the right to choose your title company—your lender cannot choose it for you.
- Provide contact information and permission for your lender and title company to contact your attorney and CPA on your behalf.
- Provide your lender copies of your business and personal tax returns from the last three years.
- Provide your lender with copies of your financial statements from the last three years.
- Provide your lender and title company with copies of meeting minutes approving the purchase/refinance.
- Provide your lender and title company with a Certificate of Good Standing from the State Corporation Commission.
- Provide your lender and title company with proof of insurance.
- Provide your lender and title company with all items mentioned in #3 above.
- Provide your lender and title company with a copy of the purchase contract.
- Provide your title company with a copy of your identification (driver’s license).