Purchase and Sale of Commercial Real Property (FL)

Praccal Guidance

Purchase and Sale of

Commercial Real Property (FL)

A Practical Guidance

Practice Note by David K. Blattner, Becker & Poliakoff, P.A.

David K. Blaner

Becker & Poliako, P.A.

There are many issues to consider when buying or selling

commercial real estate (CRE) in Florida. The considerations

that buyers and sellers face are sometimes different

and these issues may differ by asset class as well. This

practice note focuses on general considerations for CRE

transactions while noting some specific instances that may

arise in different asset classes. While this note differentiates

the considerations of the buyer and the seller, it is not

possible to identify every situation that can arise in a CRE

transaction.

No two transactions are alike and new issues confront real

estate professionals every day. This note looks at a CRE

transaction sequentially from inception through closing and

can serve as a guide to help parties involved in a deal think

about the road ahead.

For further guidance on the purchase and sale of

commercial real property in Florida, see Purchasing and

Selling Commercial Real Estate Resource Kit (FL).

Deciding to Sell a Property

Why Are You Selling?

Getting the sale process started is sometimes the hardest

part. In evaluating a potential sale, a good place to start is

to ask, “why are you selling?” Some possible reasons include

the following:

• The seller wants to cash out and use the equity invested

in the property for some other purpose.

• The current financing on the property is coming due. Has

the seller exhausted refinancing options or considered

bringing in investors?

• The property is not performing. This could be for several

reasons, including that the property has too many

vacancies or needs extensive repairs.

If the sale is not a cash-out situation, the seller should

consider how the difficulties it faces might affect the

desirability of the property to a potential buyer. If the

current financing is maturing and the seller has been

unable to refinance or attract investors, will a new owner

have similar issues? Are these issues property or market

driven rather than borrower driven? A potential buyer

might have to commit more equity in the purchase to

obtain financing. In other words, a new buyer will likely

have a low loan-to-cost ratio. Similarly, a nonperforming

property will be unattractive, as is, to potential buyers.

The sale will be considered a distress sale bringing low

offers. These properties will be redevelopment targets and

perhaps the use will be changed. The seller should set price

expectations accordingly.

Use of Proceeds on Sale

Next, the seller should consider what it will do with its

proceeds following a sale. Proper planning is essential for

tax and estate planning purposes.

If the seller intends to reinvest the proceeds in another

CRE project, consider a 1031 tax-deferred exchange which

would allow a seller to defer paying capital gains taxes

upon the sale of the property and reinvest the proceeds in

a property of like kind and of equal or greater value.

There are strict time periods that must be followed to

complete a 1031 exchange; if a seller is going to complete

one, it must be ready to complete a purchase quickly. The

process for purchasing the replacement property might

need to begin even before the seller starts the process to

sell the property. For more on 1031 exchanges, see 1031

Like-Kind Exchange Resource Kit.

Other tax considerations involve estate planning. Whether

a seller holds onto the sales proceeds or reinvests through

a 1031 or otherwise, it is good sense for a CRE investor

to have an estate plan in place to protect against probate

upon death and save on additional taxes, including estate

taxes.

Engaging a Commercial Broker

It is important to engage a broker who specializes in

commercial property, not residential property. These

are two different skill sets. Brokers who concentrate on

commercial properties have experience dealing with the

complicated aspects of a CRE transaction including the

review of property financial statements, market studies,

and commercial appraisals. They understand rent rolls and

capitalization (CAP) rates and are skilled at negotiating

issues specific to commercial real estate.

In selecting a commercial broker, look for one who

specializes in the particular asset class being sold; a broker

specializing in office buildings is not the right person to

sell an industrial property. Some brokers also have better

connections within the specific market where the property

is located. Finally, it is important that the broker has the

capability to market on all major outlets, such as MLS,

LoopNet, and CoStar.

For more information on real estate brokerage, see

Brokerage: General Issues and Relevant Topics.

Preparing the Due Diligence Package for

Potential Buyers

Every prospective buyer will want as much information

about the property as possible before making an offer, so

the seller must assemble a comprehensive due diligence

package for interested parties. A good broker will be able

to assist. The due diligence package should, at a minimum,

include the following information:

• Property financial statements. These should include

income and operating statements for the last three years

and, if possible, pro forma statements going forward.

• Rent roll, if applicable. The rent roll should show the

current rent and operating expenses (CAM) paid for

each tenant, including escalations, security deposits held,

original and remaining term of each lease, and whether

there are any renewal options. Additionally, the rent roll

should show if any tenant has expansion options, rights

of first refusal, or options to purchase.

• Maintenance reports. Maintenance reports for the

property should include scheduled, planned, and recently

completed maintenance.

• Schedule of material contracts. Include those that can

be cancelled on 30 or fewer days’ notice to the vendor

or provider as well as those that must be assigned to and

assumed by the buyer at closing.

• Prior title policies. Prior title should show the seller’s

insured ownership of the property. The buyer can use

these as a base to order new title searches for the

property.

• Existing surveys. If available, include topographical and

as-built surveys of the property.

• Third-party reports. Include all environmental and

geotechnical reports and prior appraisals prepared for the

property.

• Licenses. Include all licenses, permits, authorizations, and

approvals relating to the property.

For a sample due diligence checklist, see Commercial

Purchase and Sale Due Diligence Checklist.

Non-disclosure Agreement (NDA)

Because much of the information in the due diligence

package is confidential, the seller should ask its attorney to

prepare an NDA for prospective buyers to sign.

This is a simple agreement where the buyers acknowledge

that they are being provided with confidential information

prior to entering a contract and they agree not to disclose

the confidential information to third parties, except for

attorneys, accountants, and other professionals necessary

to help them to evaluate whether to enter into the

transaction. The NDA provides that such professionals must

agree to keep the confidential information private as well.

Getting Ready to Purchase

Property

Planning

The process of planning to purchase a property begins long

before site selection and differs if the purchase is for a land

development deal or an existing, operating project.

Land Development

• Product type. Many developers specialize in one

product, ranging from single-family home communities to

shopping centers to office buildings to industrial parks.

Some very large development companies touch many

asset classes and have different experts handling the

separate products. However, there is one truth in land

development. Not every property is right for every type

of project; the type of project a developer wants to build

determines what property to purchase.

• Market studies. Before looking for a specific property, a

developer should conduct market studies to determine

what geographic region will best support the project the

developer wants to build. If the developer specializes in

grocery-anchored retail centers, he or she should find

what areas are in need of this type of shopping center,

how many households currently exist in the area, and

how many households are planned in the coming years

that would be able to support such a center. Given the

amount of time it can take to locate a property, design

the center, get approvals, lease up, and build the center,

the number of houses coming down the line is just as

important as the number of houses already in existence.

A market study would provide this type of information to

a developer and to a potential lender.

• Area. After reviewing the market study, the developer

can determine what geographic area to focus on in

selecting a site.

• Contact with local government. In narrowing down to

a geographic area, and specifically, to a municipality,

developers should have preliminary conversations with

local governmental officials about the plans for the

project, even if a specific site has not been selected. The

developer should get a feeling for how the project will

be received by the city. Will there be opposition because

the project is high density or some other unpleasant

use? What can the developer do to assure the city of

the positive attributes of the project? These preliminary

conversations are helpful in making specific conversations

go smoothly when the developer selects a site.

Operating Project

• Asset class. As with land development deals, many

real estate investors and operators tend to stick to an

asset class that they know. But that is not a rule. Large

companies, REITS, and insurance companies, for example,

buy and sell CRE in all asset classes. In the broadest

sense, CRE is generally divided into retail, industrial,

residential, office, and hospitality.

• Class within asset class. Each class of CRE has

subclasses. For example, within retail, there are enclosed

shopping malls, strip centers (class A, B, and C), and triple

net leases, to name a few. Industrial can be divided into

light, manufacturing, cold storage, marine, and aviation,

for example. What is important to know is that choosing

the type of asset, particularly if the buyer is new to CRE

investing, can be the key to the buyer’s success or failure.

Owning and operating each type of asset may require

different skill sets.

• Capitalization (CAP) rates. As a buyer/investor begins

shopping for investment CRE, one of the first things

he or she will evaluate is CAP rates for each property.

CAP rates are the relationship between the expenses

of the property and the purchase price of the property,

calculated by dividing net operating income (NOI) by the

purchase price. NOI, in this calculation, means the total

rent for the property, less taxes, insurance, maintenance

costs, utilities, vacancy reserve, and other expenses

excluding debt service. The CAP rate assumes that the

buyer will purchase with cash and, therefore, helps a

buyer determine how much can be financed for the

property.

• Budget. At this point, the buyer should think about the

budget for both the purchase of the property and the

entire project. See Making a Deal below for a further

discussion on the closing costs that a buyer might pay. In

addition, the buyer should consider the other costs that

it will incur as a consequence of owning the property.

If the property is an operating investment property,

does the buyer have plans to upgrade and renovate the

property? Are there known maintenance issues that must

be addressed and can these repairs be made or paid for

by the seller?

For new development and construction, the buyer should

have some general ideas as to the costs of the project.

Certainly, it will be too early to know what these costs are,

other than the closing costs. However, having a general

ideal of a budget will help the buyer decide what the

maximum cost of the land should be.

Engaging a Commercial Broker

Just as it is important for a seller of CRE to engage a

commercial broker, it is extremely helpful for a buyer

of CRE to engage its own broker who specializes in

commercial property. A buyer should also look for a broker

who specializes in the asset class that the buyer is looking

for and has connections in the target market. Brokers can

be extremely specialized; some brokers are particularly

adept at identifying vacant land for development of certain

types of projects, while others focus on strip centers and

can also help with the leasing of space. The right broker

can make the process of identifying a property fast and

easy.

Making a Deal

Buyer’s Preliminary Due Diligence

Although the buyer has done some homework, there are

concrete steps to take to locate the desired property and

get it under contract:

• Site visits. The broker will have identified one or more

properties for the buyer to visit in person which may

occur after reviewing online presentations. There may be

multiple visits to the favored site to help to determine

the property’s potential for development or investment.

Like a homebuyer, a CRE buyer will look for possible

defects, physical and otherwise, that would affect

expense and price.

• Comparable sale prices. The broker is invaluable in

providing comparable sale prices (or comps), which helps

the buyer to formulate a possible offer price.

• CAP rates. Consideration of the CAP rate for the

prospective property is a key factor in making the offer.

See the discussion of CAP rates above. The CAP rate for

a particular property helps a buyer determine how much

can be financed for the property.

• Discussions with potential lenders and investors. Prior

to making an offer, the buyer should have a good idea

of how the property will be financed. Are there lenders

willing to provide financing for the project? Are the

terms acceptable? Does the buyer have sufficient equity

available or are additional investors required? If so, what

are the terms of the investment/partnership agreement?

• Approvals. In new development or a redevelopment,

another conversation with local government is essential.

The buyer should be clear on what approvals will be

required for the project including zoning and variances,

land use, plat, site plan, and environmental. Is the city/

county willing to support the project? It is smart to have

these conversations with planning and zoning staff, the

city/county manager, and elected officials.

• NDA. The seller might require that the buyer execute an

NDA (see Deciding to Sell a Property above) to release a

due diligence package. Review the NDA with an attorney

and sign as soon as possible to start the process.

Offer / Letter of Intent

The offer, in most CRE deals, is made via a letter of

intent (LOI). Sometimes the broker prepares the LOI and

sometimes the buyer’s attorney prepares it. It should

contain the following essential terms:

• The name of the buyer and the seller

• Description of the property (preferably the legal

description)

• The proposed purchase price and deposits

• Contingencies, including financing, governmental

approvals, environmental permits, and any other

conditions to the buyer’s obligation to close

• Due diligence provision

• Confidentiality

• Closing date

The LOI should state that it does not constitute a binding

agreement, except for the confidentiality provision, and

that no agreement will exist between the parties until a

formal contract is executed. Be sure to also include all

other provisions important to the transaction and LOI.

For instance, the buyer may want an exclusive negotiation

period to finalize a contract.

For further guidance on LOIs, see Letters of Intent. For a

form of LOI to use in your commercial purchase and sale

transaction, see Letter of Intent (Commercial Purchase and

Sale).

Contract

Generally, but not always, the buyer’s attorney prepares the

contract. The contract should include the following essential

terms:

• The parties to the contract. The named seller should be

the party having legal title to the property. The buyer’s

attorney can obtain a copy of the recorded deed from

the public records to confirm. The buyer might not yet

have formed the entity to hold title to the property so it

is good practice to add “and/or assigns” after the name

of the buyer in the contract and to add an assignment

clause in the contract to permit the buyer to assign the

contract, at least to an entity related to the buyer, if not

outright.

• Description of the property. It is essential to include the

legal description of the property in the contract, usually

attached as an exhibit. In Florida, many, but certainly

not all, legal descriptions are platted (by lot and block

in a recorded plat). Unplatted legal descriptions are

surveyed metes and bounds legal descriptions. The legal

description can be copied and pasted from the deed

of record or from a prior title policy or survey. Define

whether anything else is included in the term property.

• Purchase price, deposits, and method of payment.

Include when each deposit is due, who is to hold the

deposits (escrow agent), and how the purchase price and

deposits are to be paid (by check or wire).

• Due diligence. State in detail the scope and time to

complete the due diligence. The seller should require that

the buyer repair any damage to the property resulting

from the due diligence and indemnify the seller from and

against any loss or injury resulting from the due diligence.

Describe specifically what happens at the end of the

due diligence period. Does the buyer have the right to

terminate? If there is no termination right, is there an

additional deposit due?

• Title and survey examination. Who obtains and pays

for the title commitment and survey? Set forth the time

to obtain and review the title commitment and survey

and the procedures for objecting to and curing title

exceptions. If there are known title exceptions prior to

the execution of the contract, the seller should list them

in the contract and require the buyer to accept them up

front as “Permitted Exceptions.”

• Contingencies. These include financing and approvals

and any other conditions that must occur before either

the buyer or seller has an obligation to close. State the

timing for the contingencies to be satisfied and what

happens if they are not satisfied by the deadline. Does

the buyer have the right to terminate and is the deposit

returned to the buyer? Can the buyer extend the closing?

Is there an extension fee?

• Development considerations. In many CRE deals in

Florida, the parties must execute additional documents if

the seller retains adjacent properties or if the property is

part of a larger development. If the parties must execute

easements or reciprocal easement agreements or other

development agreements as part of the closing, the

contract should require that the parties agree to these

documents by a date certain in advance of closing. In

the alternative, the form of agreement might already

exist and the buyer might have to agree to sign that

agreement at closing. In that case, attach the form to

the contract as an exhibit; the parties can negotiate the

agreement simultaneously with the contract and finalize

the form before executing the contract.

• Casualty and condemnation. Include language in the

contract addressing the parties’ rights and obligations in

the event the property is damaged by casualty or taken

by eminent domain prior to closing.

• Representations and warranties. The buyer should

request representations and warranties from the seller as

to the existence and authority of the seller to enter into

the contract, that there are no lawsuits or other actions

that affect the property, confirming the accuracy of the

rent roll and financial statements of the property as

well as the leases, affirming no hazardous waste and no

physical defects, and verifying no pending condemnation

and no known physical defects to the property or

improvements.

• Default and remedies. Sadly, these are the most

important provisions of the CRE contract. It is essential

that the contract set forth the procedure for declaring a

default, how notice is provided, and whether there is any

opportunity to cure. Explain the remedies for the buyer’s

and the seller’s breach. If the deposit is to be released,

there should be explicit directions to the escrow agent.

• Costs of closing. State which party is responsible for

what closing costs. Closing costs generally consist of the

following, all of which are typically negotiable (except

perhaps the brokerage commission):

o Documentary stamps on the deed. These are

calculated at $.70 per $100.00 of consideration

paid. Note that in Miami-Dade County, documentary

stamps are calculated at $.60 per $100.00. However,

Miami-Dade County also charges a $.45 deed surtax,

so the effective tax is $1.05.

o Cost of title commitment. In Florida, it is customary

for the seller to pay for the title search, but the

parties can negotiate otherwise in the contract.

o Title premiums and endorsements for owner’s

title policy and mortgagee’s title policy. All title

premiums in Florida are promulgated by the State

Department of Insurance and are based on the

amount of insurance purchased. Talk to your client

about the premium and be aware that the insured

is entitled to a rebate of a portion of the premium,

known as the Butler Rebate. See Chi. Title Ins. Co. v.

Butler, 770 So. 2d 1210 (Fla. 2000).

o Cost of survey. The buyer is typically responsible for

paying for the survey.

o Brokerage commission. Usually, the seller has agreed

to pay its broker a commission and the seller’s broker

agrees to split its commission with the buyer’s

broker. In some circumstances, the commission might

be so low that the buyer agrees to pay its own

broker a fee.

• Prorations. Taxes, rents, utilities, and escrows are among

the items that should be prorated between the buyer and

seller at closing. Pay particular attention to the prorations

when dealing with office, retail, hotel, and other income-

producing properties.

• Closing and closing date. Where there are contingencies,

the closing date will probably not be expressed as an

actual date, but it should be easy to calculate. For

example, “Closing shall take place thirty (30) days

following the date the buyer receives Site Plan Approval.”

Describe any closing extension options, how they are

exercised, and whether there is a fee or deposit for

the option. If there is a fee or deposit, is it refundable

and applicable to the purchase price? Today, most CRE

closings take place virtually and documents are emailed

to the parties, signed, witnessed, and notarized in their

own offices and returned via email and overnight courier.

The closing paragraph should provide for this type of

remote closing.

• Brokers. A provision naming the brokers involved in

the transaction and confirming who is entitled to a

commission is essential to protect both parties from

third-party claims for unearned commissions. The

provision should contain a mutual indemnity for such

claims arising under the respective party.

• Notices. The notice provision ties with many provisions

in the contract. It tells all the parties in the contract

what constitutes effective notice. Include the method of

delivery, the time notice is effective, and addresses in this

paragraph.

• Other provisions. There are numerous other provisions

that could be in a CRE contract. Some boilerplate

provisions to consider include “Time of Essence,”

“Modifications,” “Assignment of Contract,” “Radon Gas

Disclosure” (mandatory for improved property), “Choice of

Law,” “Attorney’s Fees,” and “Survival.”

For further guidance on drafting commercial purchase

and sale agreements in Florida, see Commercial Real

Estate Purchase and Sale Agreements (FL). For forms of

commercial purchase and sale agreement to use in Florida,

see Commercial Purchase and Sale Agreement (Long Form)

(FL) and Purchase and Sale Agreement (Short Form) (Pro-

Seller) (FL).

From Contract to Closing

Buyer Considerations

The buyer has work to do before closing. Most importantly,

due diligence review begins and should include, at

minimum, the following:

• Environmental. Obtain a Phase 1 Environmental Report

including asbestos and lead-based paint, if the property is

improved. If the Phase 1 Report recommends additional

testing, conduct the Phase 2 testing. In most cases, the

buyer will need an extension of the due diligence period

to perform Phase 2 testing. For further information

on environmental review during due diligence, see

Environmental Due Diligence in Real Estate Transactions.

• Physical, structural, mechanical, and systems. For

improved property, licensed contractors should conduct

these inspections. In Florida, roof and HVAC inspections

are key.

• Soil/geotechnical. These tests are necessary whenever

the buyer plans to perform new construction.

• Financial, rent roll, and operational. Although the

seller may have provided preliminary information in

the due diligence package, obtain accurate, up-to-date

information.

• Approvals. Formal discussions should be proceeding with

governmental authorities for all required approvals. The

buyer should note the timing to apply for approvals set

forth in the contract. For example, do applications have

to be submitted during the due diligence period or only

after the buyer elects to proceed?

• Preliminary design. Again, timing is important. Design

is tied to applications. Plans must be prepared before

applications can be submitted and professionals must be

hired to prepare plans. The buyer must make sure that

everyone understands the timeline.

• Title and survey. One of the attorneys will provide

the title commitment but it will be up to the buyer to

engage the surveyor within the time frame set forth in

the contract. The surveyor will need the title commitment

to complete the survey and everyone must coordinate

with each other. For further guidance on title and survey

review, see Title Insurance and ALTA Survey Review.

• Contingencies. The buyer must be aware of the timing

to satisfy contingencies and be certain not to miss

critical dates. Financing contingencies (the date to have a

commitment for a mortgage loan or equity commitment)

often come up by the end of the due diligence period, if

not earlier. Deposits may be at risk if the buyer fails to

keep track of these dates. Benchmark dates for approval

contingencies can be scattered throughout a contract.

And, the date to obtain a final approval is paramount.

When the end of the due diligence period arrives, the

buyer often has a choice to make: terminate and receive

a return of the deposit, or proceed to closing which might

still be months or few weeks away. Usually, if the buyer

does not terminate, then the buyer is deemed to have

waived the right to terminate.

Seller Considerations

The seller has less to do once the contract is executed but

should still consider the following:

• Documents and other deliveries. The seller should make

sure to timely deliver all documents and other materials

to the buyer as the contract requires. Many contracts

penalize the seller for failure to timely deliver documents

to the buyer and the penalties include extensions of the

due diligence period.

• Due diligence. Although due diligence is solely the

buyer’s responsibility, the seller should cooperate with

the buyer and the buyer’s agents in providing access to

the property and making sure the seller’s employees and

advisors are reasonably available to answer questions.

• Applications for approvals. Where the buyer’s obligation

to close is contingent upon obtaining any governmental

approvals, the seller will be obligated to cooperate with

the buyer in obtaining the approvals. This cooperation

encompasses the execution of all necessary applications

for the approvals and might also include powers of

attorney authorizing the buyer or its engineers to act

on behalf of the seller, as property owner, in processing

the application. It might seem counterintuitive to allow a

stranger to take action that affects your property without

any controls. However, the contract protects the seller.

The buyer will be obligated to close once the approvals

have been obtained and the deposit will be fully at risk

if the buyer does not close. Further, obtaining zoning,

land use, and related approvals in Florida is very costly.

A buyer is unlikely to take on that expense all the way to

approval and then put its deposit at risk and not close.

• End of due diligence. At the end of the due diligence

period, the buyer can terminate or proceed. If the

buyer is satisfied with the results of its investigations,

then, most likely, he or she will proceed. Depending

on the contract provision, the buyer may need to pay

an additional deposit at that point. If the buyer is not

satisfied with the property for any reason, including

nothing to do with the inspections, the buyer must

follow, to the letter, the process for notifying the seller

and escrow agent, if applicable, of its decision not to

proceed. The notice must be timely. Any deviation from

the process set forth in the contract could result in an

escrow dispute.

• Contingencies. All contingencies must be satisfied

or waived prior to closing or the contract may be

terminated. If it is terminated for failure of a contingency,

the buyer may or may not receive a return of the

deposit, depending on what the parties negotiated.

The buyer may have negotiated away its right to the

return of the deposit in exchange for an extension of

the contingency period. If the buyer takes no action to

terminate the contract within the applicable time period,

the contingency will be deemed satisfied or waived and

the buyer will be obligated to close.

Closing

Closing is often anticlimactic. If the buyer and seller and

their respective teams have done their work properly to

this point, the closing should be a simple procedure. Still,

everybody has a responsibility.

• Role of the buyer’s attorney:

o As soon as the contract is signed, prepare a critical

date list of all the important dates in the contract

that the buyer must meet. Then keep the buyer on

track with these dates, alerting the buyer when an

important benchmark date is approaching.

o Review the title and survey to assure compliance

with the standards set forth in the contract and to

make certain that no matters shown on the title and

survey adversely affect the proposed (or existing)

use of the property. Prepare the title objection

or notice letter to the seller and coordinate with

the title company to assure satisfaction of all title

requirements (Schedule B-1) and resolution of any

underwriting requirements or issues. In Florida, the

buyer’s attorney often acts as the title agent for

the title company. In these cases, the attorney may

retain a portion of the premium paid for the title

policy which should be disclosed to the buyer. For

further guidance on reviewing title and preparing an

objection letter, see Title Insurance.

o Assist the buyer in evaluating due diligence matters,

alert the seller of any issues that may arise, and

negotiate amendments to the contract if necessary.

o Obtain lien letters and open permit searches and

check for code enforcement liens.

o Review and negotiate the seller’s closing documents.

o If necessary, assist your client in obtaining land use

and zoning approvals. The buyer should retain an

attorney who specializes in zoning and land use. For

more information on zoning review, see Planning and

Zoning.

o Advise on ownership structure, form the ownership

entity, and prepare resolutions. Consult with

corporate and tax counsel and advisors and assist in

preparation of partnership, shareholder, or operating

agreements.

o Negotiate with lenders and investors for financing

and/or equity documents. For more information

on financing an acquisition of CRE in Florida, see

Commercial Real Estate Acquisition Loan Resource

Kit (FL).

o Issue opinion letters to lenders. Opinion letters can

be highly negotiated documents. The buyer must

understand that no attorney will simply sign their

name to a form that a bank requests. The attorney

must read all the loan documents carefully and

then must consider the opinions that the bank is

requesting before issuing the opinion. Many opinions

are somewhat standard. But some—such as non-

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David K. Blattner, Shareholder, Becker & Poliakoff, P.A.

David K. Blattner has over 25 years of experience in complex real estate transactions and concentrates on acquisitions and financing and

development of large-scale shopping centers, office buildings and executive parks, marinas, warehouse, flex projects, hotels, single-family

and multi-family residential developments, and condominiums.

David represents a wide range of clients throughout Florida, the U.S., Canada, South America, and Asia. His clients include: developers,

multinational corporations, domestic corporations, banks and other financial institutions, condominium and homeowner’s associations,

property management companies, and landlords and tenants.

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consolidation opinions, which relate to bankruptcy

remote protections for lenders—are complex, and

the attorney takes a risk in issuing the opinion. The

buyer/borrower must be aware that legal opinions

can add significantly to legal fees for a transaction.

For more information, see Opinion Letters in

Commercial Real Estate Financing Transactions (FL).

• Role of the seller’s attorney:

o As soon as the contract is signed, prepare a critical

date list of all the important dates in the contract

that the seller must meet and keep the seller on

track with these dates, alerting seller when an

important benchmark date is approaching.

o Assist the seller in preparation and delivery of due

diligence materials and be available to answer the

buyer’s inquiries relating to due diligence.

o Respond to and resolve the buyer’s title and survey

objections.

o Provide information pertaining to the seller’s lenders

and other existing lienholders.

o Prepare the seller’s closing documents and closing

resolutions. For forms of conveyance and closing

documents to use in Florida, see Purchasing and

Selling Commercial Real Estate Resource Kit (FL). For

more information on closing documents generally,

see Closing and Other Ancillary Documents Required

for Commercial Real Estate Purchase and Sale

Transactions.

• Role of the closing attorney (often the buyer’s attorney

assumes this role but sometimes the seller’s attorney or a

title company does):

o Order the title commitment and coordinate with the

title company/underwriter.

o Obtain estoppel letters from the seller’s lender and

other lienholders and coordinate payoffs.

o Prepare the closing statement.

o Act as closing escrow agent, receive closing

funds, and disburse funds pursuant to the closing

statement.

o Record all documents in the order required by

the parties and to properly insure title. For more

on recording documents in Florida, see Recording

Procedures (FL).

o After closing, return recorded documents to

the parties, issue the title policies, and disburse

remaining funds.

Mechanics of Closing

The buyer’s, seller’s, and lender’s attorneys exchange the

agreed documents by email and forward them on to the

parties for signatures. Documents are executed, witnessed,

and notarized in each party’s own office or home office and

returned, first via email for review, and then via overnight

courier. The parties’ attorneys prepare and circulate explicit

instructions as original documents generally must be sent

to different parties. Documents that must be recorded

always go to the closing attorney. Original loan documents

go to the lender’s attorney. The buyer’s attorney and

seller’s attorney determine which original documents they

need. The attorneys can agree that the closing attorney

can initiate the wires upon receipt of email signatures or

they might wait until the original documents are in hand.

Scheduling for signing of documents is, therefore, very

important.

Closing of a CRE deal is not the end. Once a buyer owns

the property, he or she must build or operate it. The

issues facing landlords and developers are also complex,

and buyers should always keep them in mind throughout

the acquisition process. The seller must invest the sale

proceeds, perhaps in new CRE, which would mean the

seller becomes a buyer and starts the process again.