Odd things are happening. Did people forget during the recession about the role of lawyers in commercial real estate transactions?
I have been negotiating and closing commercial real estate transactions for over 35 years. Happily, as the market is picking up, I am actively at it again.
For the first time in my career, though, a remarkably odd phenomena is occurring. Clients are scheduling commercial real estate Closings with their lenders, but failing to inform their lawyer. Lenders are sometimes failing to contact the lawyers also. This would be remarkable enough, and even a bit suspicious, if I were talking simply about refinance closings, but I’m not. I’m talking about sale/acquisition closings.
It’s as if the parties have been so focused upon the challenges in obtaining financing over the past five years that they have forgotten that financing is not the only requirement for closing.
I have seen it while representing buyers, and have seen it while representing sellers. Ironically, it seems to occur more often when the buyer is a sophisticated commercial real estate investor. I’m guessing this is because some sophisticated buyers are trying to save money by conducting their own due diligence investigations themselves, or through third party vendors perceived to be less expensive than lawyers.
Be that as it may, there remains, in most transactions, a substantial amount of legal work necessary to gear up for closing. Title clearance; transfer documentation; authority documentation; loan document review; just to name a few areas requiring attorney attention. Legal due diligence is just as important as financial and operational due diligence. And it takes a reasonable amount of time to complete competently.
HERE’S A BIT OF FREE LEGAL ADVICE: Don’t wait until three or four days before closing to contact your lawyer. Contact them when there is still time for them to do you some good!!!
R. Kymn Harp
Robbins, Salomon & Patt, Ltd.
Chicago, IL
www.rsplaw.com
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