COMMERCIAL PROPERTY CLOSING is the sale and transfer of commercial property, which is property where a business or businesses operates. While many parts of the process are the same, commercial closings are different from residential closings in several ways.
The Process of a Commercial Closing:
Letter of Intent – often, a short of an agreement or of a deal memo that is not a binding agreement, is prepared. It outlines the major deal terms such as the purchase price of the business and the real estate, the due diligence expected, and when a closing is to occur.
Formal Contract of Purchase and Sale – the long form agreement that spells out the specific terms of the agreement is negotiated and executed. The buyer may purchase the stock or membership units.
VACANT OR UNDEVELOPED LAND CLOSINGS:
In most ways, the process of Closing on Vacant or Undeveloped Land is the same as for a Closing on land with a house or business structure on it. However, there may be additional points that should be covered. Looking into issues like the survey and inspecting the land for possible contamination issues can become relevant.
Understanding the rights the owner has to the use of the vacant land can be important to analyze.
Zone and Land Use Restrictions – knowing the local zoning laws and permitted uses can be crucial. Purchasing vacant land for a planned development only to learn later that the land use intended is not permitted can result is a costly mistake. A buyer should consider whether the land can be used for residential, commercial, agricultural, or industrial purposes. Learning about potential changes available to the permitted use and zoning may also be very useful to a buyer or owner of vacant land.
Can an owner get a variance from the existing zoning or land use restrictions?
It is possible. Our law firm represents clients with prosecuting legal rights to the local governments to allow for a variance.
Some factors to conder when purchasing vacant land:
Environmental Examinations – consideration to potential contamination or environmental hazards that exists or could affect the vacant land is imperative to evaluate. Buyers may conduct environmental testing to assess things like the soil, groundwater and other types of conditions that may be considered hazardous to the property. This could prevent development or add a lot of money to the property for cleanup or remediation purposes.
Utilities Availability – depending on the location of the vacant land, considerations should be made as to the availability of utilities. Discovering whether electricity is available, or the cost of obtaining access should be made. Same for things like sewer, water, gas and internet accessibility should be evaluated.
There some tax considerations relevant to vacant land purchases and sales. While a tax professional should be consulted for specifics, generally, it is likely that the closing costs for vacant land purchases are not tax deductible in the year of the purchase. Different from improvements made to residential properties, the vacant land is not considered a depreciable asset, thus resulting in different tax implications than say for commercial property.
Some of the closing costs for vacant land purchased as an investment may be deductible such as property taxes and interest on the loan taken out for the purchase. And these expenses may be used to offset rental income generated from the renting the land out, or offset against the sale of the property. However, the closing costs may be added to the cost basis which could increase the basis int the property for capital gains calculation purposes upon same.
REFINANCE CLOSINGS
Mortgage Refinancing involves paying off the existing mortgage by taking out a new mortgage, presumably with better terms than the one being paid off. That may include a lower interest rate for example. Or possibly the borrower has improved their credit rating and is able to obtain a lower interest rate with a new mortgage. If a homeowner intends to stay in their home for the extended future, then refinancing the mortgage could be a good idea.
Different Types of Refinance Transactions:
The Cash-Out Refinance: this is a refinance transaction where the homeowner reduces the amount of equity in their property in exchange for cash and better mortgage rates. The homeowner receives cash from the refinance at the Closing, which the homeowner can use for their purposes such as paying down debt or home improvements.
The Cash-In Refinance: the Cash-In refinance is where the homeowner takes out a new mortgage but also contributes cash in the refinance closing transaction. This reduces the loan debt and can help the homeowner with more favorable new mortgage loan terms.
Streamline Refinance: For homeowners with FHA (Federal Housing Administration), VA (veterans Affairs), or USDA (U.S. Dept. of Agriculture) loans, the option of refinancing their mortgages may be available. The homeowner can apply to lower their mortgage payments and pay off their home faster.
Reverse Mortgage: for homeowners over the age of 62, reverse mortgages may be available. A reverse mortgage transaction basically allows the homeowner to grant a mortgage on their home without the requirement for the homeowner to make any monthly mortgage payments to a lender who in turn will pay the homeowner a sum of money, either lump sum or via monthly payments. In exchange, the mortgage has to be paid off when the home is sold or the homeowner passes away. A reverse mortgage is a way for a homeowner to take out the equity in their home. The most typical reverse mortgage is the Home Equity Conversion Mortgage (HECM), which was established by the U.S. Government through the Federal Housing Administration program.
Average Closing Costs in Florida
Closing Costs When Selling Vacant Land
This table clarifies the closing costs typically incurred by sellers of vacant land. Keep in mind that specific fees and their division between buyer and seller can vary depending on your location and the terms of the purchase agreement.
| Closing Cost | For Sellers | For Buyers |
| Attorney’s Fee | Varies ($150-$400 per hour) | |
| Courier Fee | Varies according to location | |
| Documentary Stamp | $1.50 per $1,000 of sales price | |
| Escrow Fee (Not Always Applicable) | Negotiable (if used) | |
| HOA Fees (if applicable) | Seller pays any outstanding HOA fees up to closing date | |
| Municipal Lien Search | $140-$200 | |
| Owner’s Title Insurance (Recommended) | 0.4% of sales price | |
| Pest Inspection Fee (Recommended in some areas) | $100-$200 | |
| Real Estate Agent Commission (if applicable) | 6% of sales price | |
| Recording Fee | $125 | |
| Settlement Fee | $150-$500 | Negotiable (if used by buyer) |
| Transfer Tax (varies by location) | Varies (0.01%-4% of sales price) | |
| Utility Bills (if applicable) | Seller pays any outstanding utility bills up to closing date |
Notes:
- Items in parentheses indicate the cost is optional or not always applicable.
- Seller is typically responsible for ensuring a clear title and for any outstanding liens or fees on the property before closing.
- Buyer is typically responsible for costs associated with financing the purchase (not applicable for cash transactions) and for conducting their own inspections and title search (optional but recommended).