Closing Checklists: Important Survival Tools in Real Estate Deals
By Brad Dashoff and John Antonacci
When you are asked to work on a purchase and sale or financing transaction, one of the first steps you should take is to create a closing checklist. The closing checklist will serve as your roadmap through the transaction and can be a very useful tool for staying on top of all of the various components in a transaction.
- The elements of a closing checklist will vary depending on the type and terms of the transaction and which party to the transaction is creating the checklist. The closing checklist for a loan will include different documents as compared to a closing checklist for a purchase and sale. If you are representing the buyer in a purchase and sale transaction and the buyer is also taking out a loan to finance the purchase, your checklist will include all of the documents and information needed for both the purchase and the loan, whereas if lender’s counsel prepared the checklist, it will most likely only include the information and documents necessary for the loan. Quite often, the lender will prepare a checklist for the loan transaction so that the borrower will know exactly what the lender is requiring. The borrower can then incorporate those items into the purchase and sale checklist to create one master checklist.
- Each side may use its own checklist tailored to what it needs for the transaction, however, in large multi-party transactions, you might have one central checklist for the transaction and each party might then create its own checklist for the items of special importance to it.
- For certain transactions, such as a retail or office lease, where the lease may be the only document, a formal checklist may not be beneficial.
- In preparing a closing checklist, you should leave space next to each item to provide additional information about the item. If a document has been agreed upon or signed, it is helpful to so indicate because it shows the parties (and your client in particular) that progress is being made and everyone can refocus on the documents and issues not yet agreed upon. If due diligence information has been requested but not provided, you should indicate so and list who is responsible for providing the information. If there are open questions or issues between the parties, these can also be included next to the relevant document or due diligence item.
- The closing checklist should be updated from time to time over the course of the transaction. On larger transactions, the client may want to see weekly or daily updates but most often, updating the closing checklist concurrent with revised drafts of the transaction documents being distributed will suffice. Updating the closing checklist too frequently is not recommended because things might not have changed enough to warrant an updated draft and you may convey to your client the impression that you are generating unnecessary work for yourself (at their expense). When you are revising and updating a closing checklist, consider whether you should show your revisions in tracking (if your word-processing program has such a feature). This is a very easy way for everyone to see the progress made, or the issues that have arisen since the last draft of the checklist.
- There is no magic formula to creating a closing checklist and they come in many different forms. The goal is to come up with a form that works for you and your clients and that is easily manageable. The more complicated a closing checklist becomes, the less likely it is that it will be useful.
Do you want to learn more on this? Do you need sample real estate forms and/or a sample closing checklist? If so, click here to purchase the author’s book. GP/Solo Division members automatically receive a discounted price.
Brad Dashoff is a senior associate in the real estate group of Pillsbury Winthrop Shaw Pittman, LLP (McLean, Virginia office). His practice includes a variety of real estate matters, such as acquisitions and dispositions of commercial properties, commercial lending, mixed use development, and the creation of private equity funds to invest in real estate. John Antonacci is vice president and deputy general counsel of Atlantic Realty Companies, Inc., which is a full-service commercial real estate company that owns and manages a portfolio of approximately five million square feet of office and retail space throughout Virginia and Maryland. He is involved in a wide variety of real estate and corporate matters, including the following primary areas: purchase and sale transactions, commercial leasing (with a specialty in retail leasing), and commercial lending. Before joining Atlantic Realty Companies, Inc., he was a senior associate in the real estate group of Pillsbury Winthrop Shaw Pittman, LLP (McLean, Virginia office).
This article is an excerpt from the book The Commercial Real Estate Lawyer’s Job, A Survival Guide, by Brad Dashoff and John Antonacci, pp. 145–146, published by the ABA GP/Solo Division and available to members of the GP/Solo Division for a discounted price through the link provided at the end of this article. Copyright 2009 © by the American Bar Association. Reprinted with permission. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
© Copyright 2010, American Bar Association.