Closing Checklist Commercial Real Estate

Standard Operating Procedure: Commercial Real Estate Closing Protocol

1. Document Control & Revision History

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2. Executive Summary & Scope

This SOP defines the institutional standard for the closing of commercial real estate (CRE) acquisitions and dispositions. This protocol ensures adherence to fiduciary obligations, regulatory compliance (RESPA, Dodd-Frank, ALTA standards), and mitigation of operational risk. Scope is limited to the final 72-hour "Hard Close" phase, starting from the execution of the final Closing Statement and concluding with the confirmation of legal recording.

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3. Prerequisites & Tool Requirements

• Software Access: ERP/Accounting suite (e.g., Yardi, MRI), Secure Document Repository (e.g., DocuSign Rooms, Intralinks), and Title Portal access.
• Certifications: Notary Public (where applicable), internal Treasury/Wire Authority credentials.
• Legal Documentation: Executed Purchase and Sale Agreement (PSA), Title Commitment, Survey, Environmental Phase I, and estoppels.
• Safety PPE: Not applicable (Office/Remote environment).

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4. Roles & Responsibilities (RACI Matrix)

Key: R = Responsible, A = Accountable, C = Consulted, I = Informed

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5. Step-by-Step Operational Procedure

Phase I: Pre-Closing Audit (T-72 Hours)

• Cross-verify Proration Schedule (Property Taxes, CAM, Insurance) against PSA terms.
• Confirm "Clear to Close" notification from Title/Escrow agent.
• Validate final execution versions of Deed, Bill of Sale, and Assignment and Assumption agreements.

Phase II: Execution and Funding (T-24 Hours)

• Execute all conveyance documents via encrypted e-signature platform or wet-ink notarization as mandated by county/state.
• Submit Wire Instructions to Treasury department. Verify receipt of "Callback Verification" on bank account information.
• Confirm escrow holder has received full purchase price in cleared funds (escrow receipt).

Phase III: Recording and Post-Closing (T-0)

• Receive "Recording Notification" or confirmation of filing from Title Company.
• Update ERP system with final closing ledger entries.
• Distribute "Closing Book" (digital archive) to Stakeholders, Asset Management, and Accounting departments.

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6. Quality Assurance & Verification Criteria

• Mathematical Accuracy: Tolerance threshold for prorations is $0.00. Any discrepancy > $0.01 triggers a stop-work order.
• Regulatory Compliance: 100% of documents must match the recording office’s specific formatting requirements (e.g., margins, ink color, notarization stamp legibility).
• Risk Benchmark: All wire transfers must pass the "Dual Authorization" protocol; no single user shall possess both the authority to initiate and approve a transaction.

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7. Practical Troubleshooting Scenarios

Scenario A: Escrow Failure (Wire Reject)

• Failure: Wire is rejected by beneficiary bank due to name mismatch or account freezing.
• Protocol: Immediately initiate "Stop Payment" request. Recalculate per-diem interest loss due to delayed closing. Escalate to Legal Counsel to invoke "Time is of the Essence" clause in PSA if necessary to preserve closing date.

Scenario B: Estoppel Discrepancy

• Failure: Tenant Estoppel received at closing shows a rent concession not reflected in the Due Diligence file.
• Protocol: Halt execution. Calculate total monetary variance. Demand a credit against the Purchase Price from the Seller via an addendum. Do not proceed until a signed Amendment to the PSA is provided by the Seller.

Scenario C: Title Defect Discovery

• Failure: Last-minute "bring-down" title search reveals a new lien filed in the final 24-hour window.
• Protocol: Freeze all disbursements. Contact Title Insurance underwriter to determine if the lien is an "excluded item" or covered under the owner's policy. Require Seller to bond around the lien or provide a payoff letter in escrow before release of funds.