Documents needed for a commercial Real Estate loan.



1. Operating Statements for the past 3 years reflecting income and expenses of operations, including cost and timing of scheduled capital improvements.
2. Certified copies of all Leases.

3.  Rent Roll as of the date of the Purchase Contract, and again as of a date within 2 or 3 days prior to closing.
Estoppel Certificates signed by each tenant (or, typically, tenants representing 90% of the leased GLA in the project) dated within 15 days prior to closing;
4. Subordination, Non-Disturbance and Attornment  (“SNDA”) Agreements signed by each tenant;
5 Copies of all documents of record which are to remain as encumbrances following closing, including all easements, restrictions, party-wall agreements and other similar items;
6 A current Plat of Survey prepared in accordance with 2011 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys certified to the lender, Buyer and the title insurer, including items 1 through 4, 6(a), 7(a), 7(b)(1), 8 through 10(a), 11(a) and 14 from the Surveyor’s “Optional Survey Responsibilities and Specifications” referred to as “Table A”;
7.  Environmental Site Evaluation Report (Phase I Audit) and, if appropriate under the circumstances, a Phase 2 Audit, to demonstrate the property is not burdened with any recognized environmental defect; and
8.  Property Condition Assessment Report [ASTM Standard 2018] to evaluate the structural integrity of improvements and general physical condition of the property.


Most of these documents are ordered by the lender and or the closing attorney.

To be sure, there will be other requirements and deliveries the Buyer will be expected to satisfy as a condition to obtaining funding of the purchase money loan, but the items listed above are virtually universal. If the parties do not draft the purchase contract to accommodate timely delivery of these items to lender, the chances of closing the transaction are greatly reduced.

Planning for Closing Costs

The closing process for commercial real estate transactions can be expensive. In addition to drafting the Purchase Contract to accommodate the documentary requirements of the Buyer’s lender, the Buyer and his advisors need to consider and adequately plan for the high cost of bringing a commercial real estate transaction from contract to closing.

If competent Buyer’s counsel and competent lender’s counsel work together, each understanding what is required to be done to get the transaction closed, the cost of closing can be kept to a minimum, though it will undoubtedly remain substantial. It is not unusual for closing costs for a commercial real estate transaction with even typical closing issues to run thousands of dollars. Buyers must understand this and be prepared to accept it as a cost of doing business.

Sophisticated Buyers understand the costs involved in documenting and closing a commercial real estate transaction and factor them into the overall cost of the transaction, just as they do costs such as the agreed upon purchase price, real estate brokerage commissions, loan brokerage fees, loan commitment fees and the like.

Closing costs can constitute significant transaction expenses and must be factored into the Buyer’s business decision-making process in determining whether to proceed with a commercial real estate transaction.  They are inescapable expenditures that add to Buyer’s cost of acquiring commercial real estate. They must be taken into account to determine the “true purchase price” to be paid by the Buyer to acquire any given project and to accurately calculate the anticipated yield on investment.

Some closing costs may be shifted to the Seller through custom or effective contract negotiation, but many will unavoidably fall on the Buyer. These can easily total tens of thousands of dollars in an even moderately sized commercial real estate transaction in the $1,000,000 to $5,000,000 price range.

Costs often overlooked, but ever-present, include title insurance with required lender endorsements, an ALTA Survey, environmental site assessment(s), a Site Improvements Inspection Report and, somewhat surprisingly, Buyers attorney’s fees.

Be careful inexperienced Buyers of commercial real estate, and even some experienced Buyers, nearly always underestimate attorneys fees required in any given transaction. This is not because they are unpredictable, since the combined fees a Buyer must pay to its own attorney and to the Lender’s attorney typically aggregate around 1% of the Purchase Price.

This 1% figure consistently rings true, even though attorney’s fees in commercial real estate transactions are typically billed hourly, rather than on a percentage basis.  In the hundreds of commercial real estate transactions I have been involved in, I have found that hourly based attorneys’ fees payable by the Buyer/Borrower at closing typically range between .80% and 1.10% of the Purchase price, depending on complexity of the transaction involved. For commercial real estate transactions with a purchase price smaller than $1,000,000, the percentage is typically higher. When the purchase price is higher than about $8,000,000, the percentage is typically smaller.  The percentage usually breaks down as follows: Lender’s attorney’s fees (which the Borrower must typically pay) average between .25% and .30% of the loan amount. Fees for Buyer’s attorney usually average between .65% and .85% of the Purchase Price.

Perhaps it stems from wishful thinking associated with the customarily low attorneys’ fees charged by attorneys handling residential real estate closings.  In reality, the level of sophistication and the amount of specialized work required to fully investigate and document a transaction for a Buyer of commercial real estate makes comparisons with residential real estate transactions inappropriate.  Sophisticated commercial real estate investors understand this.  Less sophisticated commercial real estate buyers must learn how to properly budget this cost.