What to Expect During a Commercial Real Estate Closing in Pennsylvania

A commercial real estate closing involves much more than just signing a deed and handing over the keys. Whether you are buying an office building, retail location, or investment property in Pennsylvania, you’ll need to work through several legal and financial issues before the transaction can formally wrap up.

Knowing what to expect can make the process more manageable. It also gives you time to identify problems before you become legally or financially committed to a property that does not meet your needs.

Expect a Detailed Due Diligence Process

Before closing, a buyer typically has an opportunity to investigate the property inside and out. The purchase agreement should establish the scope of this due diligence period and the deadline for completing it.

Your review may cover a variety of possible issues, from zoning and permitted uses to the condition of the property itself. This is usually the last chance for parties to back out when it becomes clear the property wasn’t exactly as advertised.

Complete a Careful Title Review

A title search helps determine whether the seller has the legal right to transfer the ownership interest promised in the purchase agreement. These searches can reveal an array of serious issues, including mortgages, liens, easements, judgments, restrictions, or other matters affecting the property.

Not every title exception prevents a closing, but you need to understand what will remain after you purchase the property. An easement, for example, could interfere with planned construction or limit how part of the property can be used. Title issues should therefore be addressed before closing rather than discovered after ownership changes hands.

Prepare to Review Numerous Closing Documents

Commercial closings generate substantial paperwork, and you’ll need to go over all of it. Depending on the transaction, documents may include the deed, settlement statement, loan documents, lease assignments, and other agreements required by the purchase contract.

You need to understand these documents before signing them. Thankfully, having a real estate attorney assist with your closing is the best way to ensure you understand everything before you sign.

Expect Costs to Be Allocated Between the Parties

The purchase price is only one financial component of a commercial closing. Buyers and sellers may also need to account for Pennsylvania realty transfer taxes, title costs, recording charges, lender fees, and other transaction expenses.

Certain income and expenses for an income-producing property may also require prorating as of the closing date, including rent, taxes, utilities, and operating expenses. The purchase agreement usually determines how these costs are divided.

Expect a Final Transfer of Funds and Ownership

Once all of the closing conditions are satisfied, it’s time to transfer funds and execute the final documents. You can then expect the deed to be delivered and the keys to the property to be handed over.

Let an Attorney Simplify the Commercial Closing Process

Closing on a commercial property can be stressful, but it doesn’t have to be. With the help of the attorneys at One Oak Legal, you can ensure the transaction goes smoothly. Contact us to schedule a consultation and learn how we can help.