Commercial Real Estate Loan Closing Checklist

SOP: Commercial Real Estate (CRE) Loan Closing Checklist

1. Document Control & Revision History

2. Executive Summary & Scope

This Standard Operating Procedure (SOP) defines the mandatory control framework for the closing phase of commercial real estate (CRE) lending. This procedure applies to all internal loan officers, closing coordinators, and legal counsel involved in debt originations exceeding $1M USD. Compliance with this SOP is required to mitigate operational, legal, and financial risks associated with collateral perfection, regulatory disclosure, and funding disbursement. All actions must align with OCC/FDIC regulatory standards and internal credit policy.

3. Prerequisites & Tool Requirements

• Software Access: ERP/Loan Origination System (LOS) (e.g., nCino, Encompass), Secured Document Repository (Intralinks/Box), Electronic Signature Platform (DocuSign/Adobe Sign).
• Certifications: Active Notary Public Commission (state-specific); Internal Closing Authority Certification.
• Safety/Physical PPE: N/A (Standard office environment applies; document handling requires standard cybersecurity protocols).
• Legal Documentation: Final Title Commitment (ALTA), UCC Search Reports, Certified Appraisal, Environmental Phase I Report, Insurance Certificates (ACORD 28/25).

4. Roles & Responsibilities (RACI Matrix)

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

5. Step-by-Step Operational Procedure

Phase I: Pre-Closing Due Diligence

• Verify receipt of final Title Commitment and identify/clear all exceptions.
• Confirm insurance coverage meets "Replacement Cost" requirements per policy.
• Validate that all conditions precedent (CPs) in the Commitment Letter are met.
• Execute current UCC-1 financing statement search for all collateral.

Phase II: Documentation & Signing

• Generate final loan documents (Note, Mortgage/Deed of Trust, Guaranty, Assignment of Rents).
• Distribute "Closing Package" to borrower and guarantor for legal review (T-minus 72 hours).
• Conduct final review of Entity Docs (Good Standing Certs, Resolutions of Authorization).
• Facilitate signing ceremony (in-person or remote online notarization where legal).

Phase III: Funding & Disbursement

• Receive fully executed signature pages and confirm via Legal Counsel.
• Coordinate with Title Company for recording instructions and wire disbursement.
• Validate wiring instructions via out-of-band verification (verbal confirmation).
• Execute final funding wire from Treasury department.

6. Quality Assurance & Verification Criteria

• Document Integrity: 100% of signature pages must match the final reviewed loan documents.
• Lien Perfection: Recorded Mortgage/Deed of Trust must reflect the correct priority (e.g., First Lien) without intervening liens.
• Tolerance Threshold: $0.00 deviation allowed on principal disbursement amounts compared to the approved Loan Committee Memo.
• Audit Benchmarks: File must be "Audit-Ready" within 48 hours of funding, including an indexed digital folder hierarchy.

7. Practical Troubleshooting Scenarios

Scenario 1: Title Exception Discovered Post-Approval

• Failure: A new judgment lien appears on the property title search 24 hours prior to closing.
• Corrective Action: Immediate hold on wire authorization. Notify Legal Counsel to obtain a "clean" endorsement or subordination agreement from the judgment creditor. Do not close until Title Insurer issues an updated binder clearing the exception.

Scenario 2: Wire Instruction Discrepancy

• Failure: Borrower requests a last-minute change to the wiring destination to an offshore account.
• Corrective Action: Immediate "Stop-Work." Initiate internal fraud protocols. Request a new, wet-signed wire authorization form on company letterhead and conduct a live video verification with the borrower's authorized signatory to confirm the change request.

Scenario 3: Missing Entity Resolution

• Failure: Borrower representative signed the Note, but failed to provide the Board Resolution authorizing the debt.
• Corrective Action: Loan is legally unenforceable without curative documentation. Suspend closing process. Draft an "Incumbency Certificate" and "Resolution of Authority" for borrower execution. Validate signatory authority against the organizational bylaws before proceeding.