Buying Commercial Property

  1. Buyer signs binder with broker / real estate agent after gathered info and satisfied with the premises / price;
  2. Buyer retains an attorney on his/her behalf for the transaction;
  3. Buyer’s attorney receives and reviews the contract prepared by seller’s attorney and makes changes of the contract terms, if necessary:
      • Besides the regular terms and conditions in the contract, it is important to review the ESA (Environmental Site Assessments) / Mortgage contingency / title conveyance terms;
      • Obtain copies of current lease between the seller and his / her current tenant, if any;
      • Obtain Survey and ESA report from Seller, if seller has;
  4. Buyer signs four (4) copies of the Contract of Sale and make contract down payment (usually 10% of the contract price) payable to seller’s attorney escrow account; buyer’s attorney sends the signed contract to seller’s attorney for signatures;
  5. After receiving the fully executed contract of sale from the seller’s attorney, buyer and/or buyer’s attorney shall:
      • Retain an environmental investigation firm to do phase I ESA;
      • If necessary, to do phase II ESA;
      • Resolving the ESA issue, if any;
      • Buyer shall apply for mortgage timely, if there is a mortgage contingency term;
      • Order title search from a title company;
      • Order Survey from the Surveyor, if required;
      • Other due diligence required under the contract;
  6. If a mortgage, Buyer shall obtain Loan Commitment letter from the bank (do not lock the rate unless consulting with your attorney) within given time and forward it to title company and seller’s attorney office;
  7. Contact the seller’s attorney in resolving issues / defects in the Title Report /Survey reading; Make sure a free and clear title will be obtained at closing unless otherwise agreed upon between Seller and Buyer;
  8. Prepare documents for closing:
      • If Buyer is a corporation then need to provide corporation documentations to the title company & bank’s attorney office;
      • Prepare new lease and/or assignment of rent, etc., for buyer’s bank, if required;
      • Obtain fully executed Tenant Estoppel Certificate to buyer’s bank attorney, if any;
      • Other documents required by the Bank’s Attorney and the Title company;
      • Obtain the clearance from the bank attorney and title company for closing;
      • Prepare POA for closing, if required;
      • Schedule closing;
      • Do final inspection / walk through of the premises with broker and seller within 72 hours prior to the scheduled closing date, and report problems to buyer’s attorney immediately, if any;
      • Prepare certified and / or bank check for closing according to buyer’s attorney’s instruction;
  9. At closing, buyer / buyer’s Attorney shall
      • Be present on time at the closing table with proper ID;
      • Provide owner’s insurance binder / policy, if applicable;
      • Sign the mortgage documents with the Bank’s Attorney, if applicable;
      • Do adjustment with Seller which may include real estate tax, water / sewer charge, tenant’s rent & security deposits, if any, and pay the balance;
      • Sign closing documents which may include ACRIS, Affidavits, and /or other closing / post-closing agreement that may apply;
      • Pay the balance to Seller and your title company;
      • Receive closing documents including deed, title insurance, original survey, Lease &mortgage documents,etc., if applicable;
      • Receive keys / possession to the property;
      • After closing, the property is officially transferred from the Seller to the Buyer.

*Please take note that the above procedural instruction is for general information only, it is not necessarily the same procedure as the case maybe; please discuss / consult with your real estate attorney for detailed transaction.