When you are selling or purchasing commercial property in West Virginia (WV), it’s critical to know what is involved in the WV commercial real estate closing process. Commercial real estate transactions are often more complicated than residential transactions because they usually involve more parties and different liability concerns, plus there is usually more money at stake.
A WV commercial real estate attorney can help guide you through the process and ensure that all bases are covered before, during, and after the closing.
The WV Commercial Real Estate Closing Process
There are no federal laws that apply to the WV commercial real estate closing process. West Virginia law provides guidance on unique real estate transactions such as defining those that are tax-exempt under WV Code §37-2b-1 and transactions involving land partitioning under WV Code § 37-4-1. However, for most transactions, the buyer and seller are free to create customized agreements that satisfy both parties. In general, the commercial real estate closing process involves executing a contract, performing due diligence and preparing documents, and completing the closing transaction.
Starting the WV Commercial Real Estate Closing Process
The first step in the commercial real estate closing process is executing a contract between a buyer and seller. Unlike residential property contracts, commercial property contracts often include specialized provisions such as:
- An extended period during which the buyer can cancel the contract;
- Waiver of all contingencies;
- Agreement on who will be held responsible for future liabilities;
- Rights that convey with the property; and
All of these special provisions must be agreed upon before advancing to the next steps in a commercial real estate transaction.
Conducting Due Diligence and Document Preparation
The next step in the commercial real estate closing process is conducting due diligence and preparing the required documents. Due diligence is the best way to discover any potential problems with the property before ownership changes hands. Each party to the transaction will perform its own due diligence.
The buyer in a commercial real estate transaction should complete the following tasks:
- Review environmental reports;
- Review floodplain information;
- Conduct a survey;
- Make sure the property has a good title;
- Double check the sale agreement; and
- Review the seller’s finances.
The seller in a commercial real estate deal should complete the following tasks:
- Review the title report and property survey;
- Provide documentation that it is the rightful owner;
- Double check the sale agreement;
- Verify any escrow funds that have been received; and
- Complete any outstanding requirements in the sales agreement.
Conducting due diligence ensures that each party is protected and receives the property and payment to which it is entitled. It also avoids future real estate disputes that can be a substantial burden on all parties. As part of the due diligence process, the closing agent, lender, buyer, seller, and attorneys may each be required to produce documents and statements that support their end of the deal. A commercial real estate closing attorney can help ensure that all of these documents are produced on time, reviewed, verified, and preserved.
The Closing Transaction
After due diligence is complete, a closing date will be scheduled. On the closing, the buyer and seller physically sign the required documents to complete the sale transaction. Closing packages often include hundreds of pages of disclosures and documents, so it is important to have your attorney present to help you understand what you are signing. Every transaction is different, but, at a minimum, most closing packages will contain the deed, a promissory note, a guaranty, and a deed of trust.
What to Expect After the Commercial Real Estate Closing
Once all the documents are signed, a few final steps remain to complete the commercial real estate transaction. The escrow agent will transfer payment to prior lenders, pay any remaining parties who provided services for the closing, and forward documents to the local government for recording. A few final documents such as the title insurance policy will be sent via mail after the closing.
A WV Commercial Real Estate Closing Attorney Can Help Your Transaction Go Smoothly
There’s a lot at stake in every commercial real estate deal. Having a skilled attorney in your corner can give you confidence that your deal is airtight and that you receive the compensation or property to which you are entitled.
Jenkins Fenstermaker, PLLC is your trusted WV attorney for commercial real estate closing. Allison J. Farrell is a respected real estate attorney with extensive WV commercial real estate closing experience. Call Allison at (304) 521-6120 or get in touch with her via the firm’s online contact form.