Closing Checklist for Commercial Real Estate

Standard Operating Procedure: Commercial Real Estate (CRE) Closing Protocol

1. Document Control & Revision History

2. Executive Summary & Scope

This SOP defines the standardized workflow for the execution and finalization of Commercial Real Estate transactions. This protocol applies to all asset acquisitions, dispositions, and refinancings exceeding $5M USD. It is designed to satisfy FINRA/SEC compliance requirements, ALTA title standards, and internal risk mitigation frameworks. Scope includes pre-closing diligence verification, escrow coordination, financial reconciliation, and post-closing document archiving.

3. Prerequisites & Tool Requirements

• Software Access: ERP/Accounting Suite (e.g., Yardi/MRI), Virtual Data Room (VDR - e.g., Intralinks/Box), Docusign Transaction Rooms.
• Regulatory/Certifications: Notary Public (State-specific), Licensed Title Officer, AML/KYC clearance documentation.
• Documentation: Executed Purchase and Sale Agreement (PSA), ALTA Commitment, Phase I Environmental Report, Appraisal (Uniform Standards of Professional Appraisal Practice compliant).

4. Roles & Responsibilities (RACI Matrix)

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

5. Step-by-Step Operational Procedure

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

• Verify receipt of final Title Commitment and confirm "Clear to Close" status.
• Confirm all conditions precedent per the PSA are satisfied and documented.
• Validate VDR access for all stakeholders and secure final versions of all exhibits.
• Execute UCC search and verify no active liens or encumbrances remain.

Phase II: Financial Reconciliation (T-minus 48 Hours)

• Reconcile Closing Statement (HUD-1/ALTA Settlement Statement) against internal ledger.
• Verify prorations (Taxes, CAM, Rents, Utilities) as of 11:59 PM of the closing date.
• Initiate wire transfer instructions via secure, multi-factor authenticated channels.
• Obtain "Good Funds" letter from the closing escrow agent.

Phase III: Execution & Recording (Closing Day)

• Execute Deed, Bill of Sale, Assignment of Leases, and Estoppel Certificates.
• Conduct final review of "Signature Page" package for ink-wet requirements vs. digital e-sign.
• Authorize release of escrow funds pending successful County Recorder receipt.
• Secure "Recording Receipt" and confirm chain of title continuity.

6. Quality Assurance & Verification Criteria

• Audit Threshold: 100% of figures on the final Settlement Statement must match the Purchase and Sale Agreement within $0.00 variance.
• Tolerance: Zero tolerance for unauthorized signers (must match authorized corporate resolution).
• Acceptance Benchmark: Recording confirmation from the County Clerk must be received within 4 hours of funding.
• Archival: Digital files must be indexed in the internal ERP within 24 hours of closing.

7. Practical Troubleshooting Scenarios

Scenario A: Funds Transfer Failure (Bank/Wire Error)

• Condition: Wire transmission rejected or flagged for AML verification.
• Action: Immediate notification to legal counsel. Do not attempt re-wire until the originating institution provides a "Clearance ID." Confirm escrow extension clause in PSA to prevent default; initiate manual "Escrow Hold" instruction.

Scenario B: Last-Minute Title Cloud (Late-discovered Lien)

• Condition: Minor judgment lien or easement discovery discovered 12 hours prior to close.
• Action: Invoke "Title Cure" provision of the PSA. If lien is pecuniary, escrow holdback of 1.5x the lien value is required to proceed with closing. If non-pecuniary, legal counsel must draft an indemnity agreement for signature.

Scenario C: Signatory Unavailability

• Condition: Authorized signatory for the entity becomes incapacitated or unreachable.
• Action: Execute secondary "Limited Power of Attorney" (LPOA) previously filed for emergency corporate action, or leverage existing corporate resolution allowing for an alternative signing officer. Update document signing logs immediately.