Commercial real estate closing has various critical differences from residential closing, with most parties purchasing the property as legal entities. You may be dealing with LLCs, partnerships or corporations.
A neutral third party will be required to act as an escrow company to follow the terms of the commercial real estate contracts, local regulations and instructions
This process can be lengthy and complicated, so we’ve put together this easy-to-understand explainer on commercial real estate closing in Florida so you can get to grips with what to expect.
What is Commercial Real Estate Closing?
Commercial real estate closing is the final step in processing a commercial real estate transaction. It sees both parties complete the final steps, such as preparing and executing the relevant document, paying fees and transferring the real estate title from the seller to the buyer.
Why Commercial Ownership?
Many people purchase real estate via legal entities to protect their personal assets from creditors of their business. Shareholders and business members are protected from the debts and liabilities of a corporation, for example.
To ensure limited liability, you should properly form the corporation with an attorney and the appropriate liability insurance coverage.
What is Escrow?
Escrow is where a third party holds the funds for the purchase of the commercial real estate, on behalf of the two parties until both sides have completed their duties to complete closing.
Florida Commercial real estate usually has a more structured escrow process than in residential sales. Once the initial deposit is placed, there will likely be an additional deposit after inspections and loan approval are completed.
In Florida, you can use an escrow company or a Florida real estate attorney to complete that step.
What Does a Commercial Real Estate Closing Transaction Include?
If you’ve been involved in a residential real estate closing, then you’ll may be familiar with various steps of the closing process.
However, a Florida commercial real estate closing includes several other important documents unique to commercial sales (especially if it’s part of the sale of a business).
The Florida commercial real estate closing process includes:
1. Letter of Intent
2. The Drafting of the Purchase and Sale Agreement
4. Completion of Closing Documents
5. Escrow
6. Sharing of insurance policies.
Read Related: Florida Commercial Real Estate Closing Document Checklist
Do I Need a Lawyer for a Commercial Real Estate Closing in Florida?
It’s highly advised that you hire a Florida commercial real estate attorney. Our experienced lawyers can help ensure that your documents are signed, reviewed and filed properly to protect the deal from collapsing and your business from facing any liability over costly mistakes.
The Florida commercial real estate closing process is also notoriously complicated, so having a legal expert on your side can keep the process going smoothly, preventing you from facing lost time due to errors.
What Commercial Closing Costs to Expect
What Are Closings Costs?
Closing costs are the fees, services, dues and taxes required to be paid by buyers and sellers, and any other additional expenses not included in the sales price. Generally, closing costs are between 2%-5% of the commercial real estate purchase price.
Closing costs are paid once each party has signed the required documents and the title is ready to be transferred.
Who Pays for Closing Costs?
In Florida, closing costs apply to both sides of the commercial real estate sale. How these charges are split is determined by the county where the property is located, and how the terms are negotiated.
Using a Florida commercial real estate lawyer may allow you to negotiate with the other party to cover the closing costs, in exchange for a different sale price. Or, if the other party’s desperate for a deal, they may be more willing to help.
Buyer Closing Costs:
- Title Insurance charges
- Lender charges
- Inspection charges
- Survey charges
- State Tax and Local Tax Changes
- Escrow Settlement Charges
Seller Closing Costs:
- Title insurance charges
- Estoppel and HOA Charges
- Payoff charges
- Realtor commissions
- State Tax and Local Tax Changes
- Escrow Settlement Charges
Contact a Commercial Real Estate Lawyer in Florida
If you’re buying or selling a property in Florida, our Florida commercial real estate lawyers can help.
Our experienced and award-winning lawyers can guide you through the process, ensuring your rights are protected while also minimizing the impact of closing costs. We’ll also coordinate, prepare and complete documents related to the title, deed, transfer, and loan acquisition.
Free Consultations
If you’re purchasing property or land in St Petersburg, Florida or Riverview, Florida, contact us today.
Our St Petersburg & Riverview real estate attorneys have extensive experience that can help you through these tricky moments, reviewing your contract, advising you on the next steps to secure your transaction, and successfully finalizing the purchase of your new home or commercial property.
Contact us today to schedule a free consultation.
