The successful sale of a commercial property does not just arise from careful staging, strategic advertising, and a fruitful negotiation or bidding process with prospective buyers. Just recently, ReDev oversaw the record closing of the Daly Grove Centre in Edmonton. Here are the key steps a commercial real estate asset management company like ours undertakes to ensure the successful closing of our assets: Develop a Transaction Plan It's essential to develop a transaction plan for guiding and shaping successful contract negotiations, as well as having steps for the closing and post-closing activities. For instance, closing a sale may come with a few terms that need to be met, such as zoning requirements, arrangements for utilities, and confirmation of the structural elements of the building. A well-laid out transaction plan that comes with the purchase agreement can provide a mechanism for resolving such concerns, and have them included as part of the closing requirements. Assess Issues and Mitigate Potential Risks To mitigate the effects of potential slow downs on the closing of a commercial real estate property, “risk-shifting” techniques can be adopted. This can include title insurance with an appropriate use of commercial endorsements. Note that when addressing risk-shifting opportunities, it is in your best interest to work with a commercial real estate asset management company. An asset management company's extensive experience can help facilitate a hassle-free closing. They have in-depth familiarity with endorsements that can be the difference between overcoming title obstacles through creative and effective contract drafting, or a failed transaction. Prepare for Third-Party Delays Due to extensive experience, a commercial real estate asset management company can navigate the intricacies of the closing period, recognize the signs of a potential delay, and push for a timely response when necessary. By cultivating valuable relationships with reputable vendors and third parties over the years, an asset management company can expedite the transaction efficiently. Coordinate Closing Requirements These closing requirements include ensuring the transaction goes through escrow, verifying the signing authority, conducting due diligence, and processing the title and closing documents.
- Have funds held in escrow – this builds trust between selling and purchasing partie,s as all agreements pertaining to the sale must be met before the seller receives the funds, and the purchasing party receives the title to the property.
- Verify signing authority – commercial real estate transactions involve corporations or other legal entities.It’s important to ensure the person signing and executing the documents is granted proper authority , either through a corporate charter, letters of authorization, or a board resolution. This ensures the buyer has legal authority to commit to the transaction and the seller is legally authorized to dispose of the asset.
- Due diligence for buyers
- Received the most recent title insurance policy
- Access to recent survey report
- Review seller's reports and records
- Confirm zoning compliance and review environment report
- Search for outstanding tax cases
- Due diligence for sellers
- Buyer has delivered down payment to the escrow agent
- Register responses to objections to the title and survey report
- Execute assignment and assumption of leases by the buyer
- Accept title report and series of closing documents – before successfully closing a deal, both parties must agree to accept and execute the title report; assignments and assumption of leases; deeds; environmental reports and assignments of liability; and zoning disclosures.
Working with an experienced commercial real estate asset management company can reduce these potential last-minute hurdles and help expedite a successful transaction. Closing a deal on a commercial property in Calgary? Successfully navigate the intricacies of the closing period, and leverage it into a prime acquisition with the help of an experienced commercial real estate management company. Call us at 416-225-5700 today.