What Makes a Commercial Closing Different?

While residential and commercial real estate closings share certain legal mechanics, the commercial process is fundamentally more complex. The parties involved, due diligence required, and financing terms often demand a more customized, strategic approach. 

If you’re entering the commercial market—whether buying, selling, or developing—here’s what sets a commercial closing apart. 

1. More Extensive Due Diligence 

Commercial buyers must investigate: 

• Environmental conditions (Phase I or Phase II assessments) 

• Zoning compliance 

• Leases and tenant estoppel certificates 

• Building condition reports 

• Operating expenses and income history 

This period is typically longer than in residential deals and may include negotiated extensions. 

2. Custom Contract Terms 

Commercial purchase agreements are not one-size-fits-all. They often include: 

• Complex contingencies tied to financing, permitting, or income performance 

• Earnest money held in escrow over multiple milestones 

• Assignment clauses for entities or investment groups 

Each contract is heavily negotiated and often tailored to the asset class involved (office, retail, industrial, multifamily, etc.). 

3. Entity-to-Entity Transactions 

Most commercial transactions are conducted between legal entities (LLCs, corporations, REITs), not individuals. This raises additional considerations around: 

• Proper entity authority and resolutions 

• Multi-member ownership structures 

• Tax strategy and liability protection 

Your legal team should verify signatory authority and ensure entity documentation is in order. 

4. Title and Survey Requirements 

Commercial properties often require ALTA surveys, specialized title endorsements, and additional title due diligence to address: 

• Easements and access rights 

• Shared parking agreements 

• Mineral reservations or pipeline servitudes 

• Signage and boundary issues 

At Title Stream, we coordinate with attorneys, surveyors, and lenders to ensure a comprehensive closing experience—resolving title and compliance issues before they become costly post-closing problems.