Commercial property managers buying or selling property will need to deal with closing costs, and these issues can be complicated, according to industry expert Daniel Doran.
When purchasing a property, it is necessary for both parties to negotiate a deal, which involves not only the building itself, but also financial hurdles to climb. However, everything can be discussed during this process. Contracts need to specify certain closing expenses such as settlements, surveys and any other insurance-related fees, Doran wrote in an article for RealtyBizNews.com.
There is a piece of legislation ? the Real Estate Settlement and Procedures Act ? that restricts smaller commercial real estate properties from being subject to unspecified fees at the time of closing. However, Doran explained that anything larger than four residential units will not have this protection.
Who needs to pay the fees?
With each side taking their part to ensure they have all of the sales issues ironed out, it is necessary to know that there is a list of payments each side should be covering, according to Doran. Sellers typically deal with the title insurance policy costs, while they also take care of the costs that would make the title more easily transferrable at the time of the sale.
The American Land Title Association survey would be completed before any lending was underway at a property, he said. These surveys can be expensive, costing at least $800. All taxes at the local level are taken care of by the seller, which includes title fees related to deed stamps. Additionally, Uniform Commercial Code searches are covered in this way, as well.
The buyer is not exempt from fees, by any stretch. Many permits need to be acquired by the property buyer, which can be for business licensing, or simply operations, according to Doran. An environmental study will need to be scheduled for the property, which is the responsibility of the buyer, as well.
Other property inspections will be paid for in this way, which allow the business to know that it can operate there safely, he added. Any further surveying will also need to be completed, especially when dealing with a flood search or topographics. Finally, financing the paperwork and administrative fees is this party's responsibility, as well. This includes mortgages, closing fees and the deed.
Posted in Commercial Banking
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