Organizing Transaction Closings

Vol. 2, No. 12

Brad Dashoff is a special counsel in the real estate group of Sheppard Mullin Richter & Hampton LLP (Washington, DC, office). His practice includes a variety of real estate matters, such as acquisitions and dispositions of commercial properties, commercial lending, mixed use development, sale-leaseback transactions, 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).


  • Learn how to prepare for a successful closing.


From The Commercial Real Estate Lawyer's Job: A Survival Guide, Chapter 19.


Organizing Transaction Closings

Closing occurs when each party to a transaction delivers to the other its consideration, such as money or property. People also use the term “closing” to refer to the events immediately preceding this moment, such as finalizing transaction documents and reviewing settlement statements.

The key to preparing for a successful closing is to be organized. If you have a closing checklist, you should use it to keep track of all documents and other deliverables needed for the closing. If you do not have a closing checklist, at a minimum, you should create your own list of documents and deliverables needed for the closing. You should also review your transaction documents to determine whether they include any conditions to closing. If there are any conditions to closing, you should add them to your checklist and consult with the client or a senior lawyer to find out when the conditions will be satisfied. You want to avoid being surprised about the timing for the satisfaction of closing conditions and finding yourself in a position that prevents closing the transaction in a timely manner.

As early as possible in a transaction, you should find out who is going to be signing the documents for your client and when they will be available. You do not want a closing to be delayed because the individual with the authority to sign documents is on vacation or otherwise unavailable. If possible, you should find out the schedules for multiple people authorized to sign documents in case any one of them is not available. Scheduling becomes especially important during the summer when many people take vacations, and at the end of the year both because people take vacations and because many clients feel pressure to close deals by the end of the year for income tax and accounting purposes. If there is no one available to sign documents, the deal cannot close.

If you are organized, you should be able to have much of the work finished before the day of closing, and the less time a client has to spend dealing with a transaction on the day of closing, the more he or she will appreciate your efforts. In a perfect closing, the client will have to do nothing but confirm he or she is ready to close. There are often business issues that arise on the day of closing that may hold up the closing and clients understand this, but clients do not appreciate when a closing is delayed due to a procedural error, such as forgetting to have documents signed or forgetting to provide wiring instructions so that the buyer or lender can wire funds.


Tips and Suggestions

1. It is never too early to prepare for the closing. As you are creating and updating your closing checklist, you should always be thinking about what you will need to have for the closing and how long it might take to get it. You should allow extra time to obtain anything that a third party will be providing, such as an estoppel certificate from a tenant or a certificate of good standing from a secretary of state’s office. Do not wait until a day or two before closing to follow up on third-party deliverables because it may be too late.

2. Cooperation between you, opposing counsel, the parties, and the title company handling the closing is key. You should coordinate with all parties to make sure everyone knows who is responsible for which tasks. If your client wants to use a new entity to purchase real property, confirm with your client whether they or you will be creating the new entity.

3. Collect signature pages to all transaction documents in advance. Once you can identify all of the documents needed for closing, you should go ahead and prepare the signature pages and send them to the client. You want to be as prepared as possible but you do not want to send out signature pages for execution too early because you may wind up having to send out, and asking your client to take time to sign, additional documents. The client should sign the documents and return them to you so that you can confirm that all documents, and the correct number of originally executed copies of each document, have been signed.

4. Though it is helpful to have a document number or file name in the footer of your documents so that others will be able to locate the document or identify which version is being reviewed, the exception to this practice is on signature pages. Since the parties may negotiate documents up to the closing, it is easier if you distribute signature pages that do not have document or version identifiers on them, which could be different from those of the final draft of the document. If the executed signature pages have a different file name or number or a different version number in the footer than does the body of the document, people looking at the document in the future may wonder if the signatories intended to agree to the attached document.

5. Once you have collected all of your client’s signature pages, you can then either hold them until it is time to close or you can send them to the title company conducting the closing to hold in escrow until you authorize their release. By sending the signature pages to the title company to hold in escrow, you avoid the need to scramble for signatures on the day of closing. When sending signature pages to the title company, you should make sure you also include a closing instruction letter. The closing instruction letter sets forth the terms and conditions by which the title company will release the signature pages from escrow and close the transaction. If you are representing the buyer in a purchase and sale, you want to make sure the title company has received a copy of the deed conveying the property and is ready to issue title insurance acceptable to you before you agree to release the buyer’s signature pages. If you are representing the seller, you want to make sure the title company has received the buyer’s funds before you agree to release the deed. If you are representing the lender, you want to make sure the title company has received an executed copy of the deed of trust before you agree to release the loan proceeds.

6. Before sending out signature pages to be executed, you should confirm with the other parties to the transaction as to the number of original copies of the documents they would like. Some clients only want one originally executed copy of the transaction documents, others prefer more, and still others only want electronic copies. Keep in mind that most jurisdictions require an original signature on documents to be recorded in the land records.

7. If you are sending hard copies of documents to be signed, your client will appreciate it if you attach “Sign Here” and “Notarize Here” stick-on flags to identify for the client the location of signature lines and notary blocks in the documents. If multiple individuals at your client need to sign documents, using a different colored stick-on flag for each individual will be helpful. Some clients prefer that you send them documents by e-mail but, if you have the time, whenever possible, to avoid the client making a mistake, you should always try to send hard copies with stick-on flags indicating where the required signatures are needed.

8. When you send documents to parties for execution, group all documents to be signed by each person together in one package. This minimizes the disruption of that person’s time. Look through all transaction documents to make sure you know which documents each party must sign.

9. Try to compile all documents (including signature pages, schedules, and exhibits) prior to the closing. There is a temptation to let things slide until after the closing, but you should resist this temptation. You will never have a better chance to collect everything than at closing. Following a closing, both sides may lose the motivation to follow up on outstanding schedules and exhibits.

10. Always check, double check, and triple check signature blocks on documents. It is easy to revise the body of a document or insert a slip page to correct a mistake, but once your client signs the signature block, it might be difficult, and embarrassing, to ask them to re-execute documents because the signature block was wrong. If your client has an in-house lawyer, ask him or her to confirm in advance that the signature blocks are correct. Another way to check the signature blocks is to request a copy of the entity’s organizational documents.

11. Even with the help of a paralegal and/or a secretary, lawyers almost always wind up taking care of certain administrative tasks themselves during a closing. Always assume that any such task will take longer than it does during any ordinary day. Closing documents can become very large once you compile signature pages and exhibits and schedules. If you plan to e-mail large PDF, Word, or other electronic files, you will need to verify that they are not too large to be sent from your firm’s server or received by the recipients’ servers. Often, closings can be held up while large documents are broken into smaller files and sent out to various parties for approval. Try to find out about server size before closing. Your client will not appreciate waiting around while you try to figure out how best to scan and e-mail documents.

12. Money in commercial real estate transactions is typically transferred by a bank wiring system known as the Fedwire. For more about the Fedwire, see Wiring instructions generally consist of the name and address of the bank to receive the funds, its routing number, the account number where the funds are to be wired, and the name and phone number of a contact at the bank. If your client is buying property or lending funds and the closing is taking place through a title company, you will need to obtain the title company’s wiring instructions. Your closing instruction letter should require the title company to hold your client’s funds until you (or your client) authorize the release (generally, once you are comfortable that all conditions to closing have been satisfied). If your client is selling or financing property, you will need to provide the title company with your client’s wiring instructions so that the title company knows where to wire the funds from the buyer or lender. Your closing instruction letter in this case will instruct the title company to release the deed or deed of trust (and other closing documents) once you are comfortable that all conditions to closing have been satisfied. There are cutoff times each day for wiring funds in the United States. In advance of closing, you should find out the wiring deadlines to which the parties are subject and make sure that all of the parties are aware of these deadlines.

13. If possible, pre-clear any documents to be recorded in the land records with the appropriate recorder’s office. The title company you are using to conduct the closing or issue title insurance should be able to help you in this process. The individuals at the title company should know what will and will not be accepted for recordation and who to talk to at each recorder’s office. You do not want to go through the closing and then find out that the recorder’s office will not accept your documents.

14. Every transaction will have a settlement statement (sometimes called a closing statement) that sets forth the various costs and expenses to be paid by each party. Examples of such costs and expenses are utility bills, tenant rent payments, real estate taxes, and maintenance contracts. Each of these amounts is prorated as negotiated in the purchase agreement, which generally will hold the seller responsible for any such costs occurring prior to the closing and hold the buyer responsible for any such costs occurring from and after the closing. The settlement statement will also include the amounts owed for transfer and recordation taxes. As previously discussed, most jurisdictions have customs as to the allocation of responsibility for paying these taxes, but the parties are able to negotiate a different allocation. You should review the settlement statement very carefully and make sure you understand and can confirm each line item on the settlement statement and make it a habit to request backup documentation and calculations for each line item. As part of this process, you should review the code sections (state, county, and city) governing the amount of transfer and recordation taxes to be assessed, as well as the code sections governing any exemptions from having to pay these taxes, to confirm that the amounts allocated on the settlement statement are correct. Mistakes often occur on the earlier drafts of the settlement statement as both sides pull together the documentation evidencing the items to be listed on the settlement statement.

15. Most commercial real estate closings are conducted through escrow by a title company; however, for larger, more complicated transactions, you might conduct the closing at a law firm. If the closing is taking place at your firm’s office, make sure to reserve a conference room for the closing large enough to accommodate the correct number of people, a smaller room (sometimes called a “breakout room” or “caucus room”) for opposing counsel and its client to meet in private, and visitor offices for anyone who might need his or her own place to work. If you have outsiders attending the closing (including opposing counsel), it is a good idea to have beverages available in the closing room. If the closing takes place during mealtime, consider whether you should order food for everyone attending or at least have phone numbers and menus available for restaurants that will deliver should anyone decide to order food. You should also make sure that you have paralegal and secretarial help and easy access to a printer and copier, and possibly a networked computer, in case documents need to be revised or printed.

16. If certified formation documents (articles of incorporation, certificate of limited partnership, etc.) or good standing certificates are required for the closing, the lawyers for the party required to produce such documents should either ask the client to order them or order them themselves. A couple of weeks before the closing, you should ask opposing counsel what date the certificates must reflect and plan accordingly. Each state has a different response time for producing these documents. For example, you can obtain these documents on the same day you order them from the State of Delaware, but in the Commonwealth of Virginia, the order can take a week.

17. Check, double check, and triple check your documents to make sure that you are using the right versions.

 18. Have folders made and labeled for each document and signatures to be delivered at the closing. For example, a folder might be labeled “Tenant Notice Letter.” If there are ten tenants on the property, you should have a separate folder for each tenant’s notice letter. The folders will help you track which documents have been executed and will help create final files and closing binders for the transaction. Also, using folders makes it easy to have a secretary or other non-lawyer help you with the closing because all he or she needs to do is make sure that each folder has a fully executed document.

19. Hold a pre-closing. For most transactions, the parties will not want to take time on the day before closing to inspect all of the documents, but you should still do so on your own. This way, the closing itself will run more smoothly.

20. Regardless of whether your closing is taking place through escrow or in person, you should make sure that everyone involved is aware of the closing and has agreed on a specific closing date.

21. Even if your closing is conducted through escrow with the parties joining by phone, you should reserve a conference room. Spreading out your documents on a conference table will help you keep organized. Working from a conference room (away from your office) will keep you from being distracted by other tasks.

22. If people from outside your firm are attending the closing, make sure their names are on any required list, such as those for building security or your firm’s reception area.

23. All closing documents in the transaction, no matter how large or small, should be prepared prior to the closing date so that everyone has a chance to review them. No one, including opposing parties and counsel, should be surprised on the closing day. Of course, issues may arise that require additional documents to be drafted on the day of closing, however, you should try to avoid this if possible (through a pre-closing or a less formal conference call prior to the closing date).



The Commercial Real Estate Lawyer's Job: A Survival Guide


Did you find this article helpful? Do you think more information like this would help you? More information is available. 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. 145–148, 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. GP/Solo members can purchase this book at a discount.


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