- Be cognizant of which date is selected for closing: Typically, in a purchase and sale agreement, a closing date will be set out a certain number of days in the future that will allow sufficient time for a purchaser to perform requisite due diligence: 30 days, 45 days, 60 days, 90 days, etc. Often, the business day falling closest to the stated time-period is selected as the date for closing. Sometimes this date is set before attorneys are involved at the letter of intent stage. We recommend that purchasers and sellers, and their attorneys, take a closer look at the date set for closing, and follow these guidelines:
ii. Be wary of Mondays, also. A few of the considerations that apply to Friday closings also apply to Monday closings. Unless the deal is large enough that it will warrant unfailing attention by all parties involved throughout the weekend, gaps in deliverables that existed Friday afternoon will likely exist Monday morning. Closing may have felt far enough away on the Friday before closing, but on Monday buyers and sellers and other third parties often realize that they had not made adequate arrangements to timely close without a mad scramble.
iii. Set Closing in Advance of Actual Deadlines. When an actual deadline (like a tax exchange deadline) exists, communicate the deadline to your attorneys and, perhaps, under the advice of your attorney, the other parties to the transaction so that everyone can be on the same page. Unless other considerations exist, make sure the date for closing is set at least a few days, more if possible, before the deadline to ensure that the closing will occur in time.
3. Be responsive. For large transactions, closing documents may go through many iterations before being finalized. Because of the speed in which documents can be revised and distributed electronically, parties are more apt to send around minor revisions to documents. The timeframe for getting documents finalized can be significantly chomped up if a buyer or seller fails to review or approve revisions for just a couple of days. Ultimately, this lag increases the number of open items that closing agents, party attorneys and third parties will have to juggle at the time of closing. Additionally, matters may arise that could affect a purchaser or seller’s decision to move forward with a transaction; responsiveness may ensure you are able to walk away without penalty or amend the deal to more favorable terms.
4. Deliver what you must. If you have reason to believe that the other party to a transaction will attempt to renege on its closing obligations, in order to be entitled to all the remedies for default under a purchase agreement, you may still have to show that you were ready, willing and able to close on the date set for closing. Because there is no sit-down closing, you will have to do more than just show up to a physical location. In order to ensure you meet this standard for remote closings, deliver (to the closing or escrow agent, or other side, as appropriate), to the best of your ability, all documents required to be delivered to you under the purchase agreement, which may include deeds, assignments, or bills of sale. If you or your attorney cannot finalize all documents without the approval or input of the other side, send signature pages to such documents to the appropriate closing party to be held in escrow, and try to produce a written record showing that you submitted requested revisions or comments to closing documents to the other side. For a purchaser, demonstrating that you are ready, willing and able to close should also entail wiring the required purchase price to the appropriate closing or escrow agent. Your attorney should be able to guide you through this process.
As always, hiring an attorney with experience in commercial closings early in the purchase and sale process (prior to the drafting of a purchase and sale agreement) is the best way to ensure that a remote closing is handled as smoothly and professionally as possible. An experienced attorney will remind you of the considerations discussed above and walk you through any and all difficulties that may arise. If you have any questions leading up to the purchase and sale of commercial real property, business assets, or business interests, please feel free to reach out to me directly.