In buying commercial property, whether vacant or improved, the parties to a commercial transaction want to close efficiently and quickly. At Liff, Walsh & Simmons, we do both while completing the complicated process of a commercial closing for our clients
Document Review and Order Title Report
Our first task is reviewing the initial title order and documents received from the client. It can be a contract, letter of intent or simply an email. Our job is to review these items and order the title report from land records on the correct property while looking for any obvious issues that we can immediately clean up. It seems simple, but sometimes a title order involves additional research to find adjacent parcels or even to locate a starting point for the title search
Next, we work behind the scenes with the title insurance company, reviewing the title and underwriting the transaction. Sales, financing, and refinancing of commercial property requires different tools and processes. The client will be asked to explain the transaction so that we can effectively prepare the title commitment for the buyer and/or lender
Order the Property Survey
Buyers and their lenders usually require an ALTA/NSPS Land Title Survey (“ALTA Survey”) that we can obtain and review for them. An ALTA Survey combines a boundary survey by graphically showing and describing the physical outline of the land with the location of improvements, possible encroachments, easements, utilities, and research as to the title exceptions of record. ALTA Surveys provide important information necessary for producing a title insurance policy for a Buyer and their Lender as well as showing any potential issues with the land and the improvements.
Working with the title report and surveyor, the legal description is finalized for the commitment, deed, loan documents and title insurance policy. In addition, the ALTA Survey and the title report disclose any issues on the ground that need to be resolved on behalf of the client. These issues could be encroachments, fences offline, buildings existing into or from an adjoining parcel, roads and utility easements running under or through buildings, access issues, and gaps and overlaps of boundary lines. We review the title and survey for the parties to find issues and then work to resolve them.
Review Title Exceptions
The new lender and/or buyer will want to review the title exceptions listed in the commitment and shown on the survey to determine what they will need from the title insurance company to become comfortable with the state of title to the property. There may be details that require special title insurance endorsements, such as access, same as survey, subdivision, etc. We work with the title insurance company to determine what steps need to be taken to provide the insured party with everything they need to proceed with the transaction.
We will also likely require and review corporate authorization documents, including articles, by-laws, and resolutions authorizing the transaction and naming who may sign on behalf of the party in question. Knowing who may sign for a corporation, partnership, or limited liability company is essential to conducting closing and providing title insurance coverage
Develop the Settlement Statement
Next, we gather information for insertion in the settlement statement. The settlement statement must document the transaction details to protect the parties and the title insurance company. Payoff figures, survey charges, title insurance, transfer and recordation taxes, lender fees and charges, attorney costs, deposits, new loan advances, UCC Searches, etc., must be documented on the settlement statement. Adjustments, such as utility costs and tenant deposits, are also included on the settlement statement to accurately memorialize the transaction for corporate and tax purposes.
In some cases, we assist the lender’s counsel with the loan documents by providing a special language for deeds and mortgages so that they will be properly taxed and promptly recorded at the courthouse. No consideration deeds, refinances, and loan modifications are only some of the situations where special language is needed to record the documents. In addition, there are special forms that each jurisdiction may require before they will accept the documents for recordation. Examples of such forms are the tax certificate, FP7c form and Statement of Debt in Washington, D.C., and the tax/lien certificate and Refinance Affidavit in Maryland.
How to Handle Complex Deals and Closings
In extreme cases, complicated commercial closings can take days and consist of long conference tables lined with documents. While most commercial transactions are simpler, we can handle transactions of all types and sizes. We see that all documents are available and properly signed and notarized, funds are tracked and disbursed, the recording package is prepared to be sent out to the courthouse, and packages are prepared for the various parties for their records.
The Importance of Post-Closing
Post-closing is an underappreciated aspect of the commercial transaction. The recording must be tracked through the recording process, with recordation confirmed by our staff. Releases of existing mortgages must be obtained and recorded. Title policies are prepared and distributed to buyers and their lenders. 1099 tax forms are prepared and sent to the IRS. Third parties, including surveyors, appraisers, environmental professionals, lenders, etc., all need to be paid, either by wire or overnight delivery of a check.
Select the Right Professionals
From start to finish, the professionals of Liff, Walsh & Simmons work to ensure that your commercial closing occurs in a smooth, accurate and professional manner. No matter the type or size of commercial closing, we can deliver a successful transaction. Whether in DC, Maryland, Virginia or beyond, we look forward to working with you and guiding you through the process of your sale, purchase, or financing.
About Liff, Walsh & Simmons
Liff, Walsh & Simmons is a full-service business law firm serving the legal needs of small businesses and privately held companies, their owners and operators, and individuals throughout their business and family life cycles. From helping entrepreneurs bring their business visions to market, representing middle-market companies in business transactions and disputes, and preserving the wealth a family business has worked so hard to earn, we take pride in providing value-driven solutions and great results. Our responsive service is focused on general and transactional business advice, commercial and civil litigation, real estate, land use, finance, and estate planning and administration. At Liff, Walsh & Simmons, we are Experienced, Innovative, and Entrepreneurial.