Post-closing Obligations in Commercial Real Estate Transactions

Real Estate Influence
January 15, 2013 — 1,033 views  
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Whether you are a buyer or a seller of real estate, you will find that there are always ongoing obligations and rights once the property is purchased or sold. Regardless of the verbal agreement between the seller and the buyer for post-closing obligations, it is always better to have everything in writing and inked by the parties involved in the process. By doing this, you can avoid misunderstandings in the future about the obligations of each party.  

Steps Involved in Commercial Real Estate Transactions

Commercial real estate dealings might be highly lucrative, but they are indeed very complex and involve several problems. So, it is important that all the clauses, terms, and conditions are discussed before any decision is made. By doing this, both the buyer and the seller will be out of any kind of legal issue. Commercial real estate dealings need involvement from different parties. This is the main reason why such transactions require lot of understanding from the start to the finish. Guesswork can prove to be highly problematic in such dealings.   

Post-closing Obligations to Consider

Once the real estate dealing is over, there are certain issues that can arise. As a real estate professional, you might face warranty issues, title defects, escrow account related problems, and seller disclosure issues.

Title insurance is basically the contract between the buyer and the title company. The insured accepts to pay premium for the title policy. In case the title to the property insured is probed after closing, the buyer might observe that the title to his or her property is defective. This might happen even when the title firm examines the records and declares that the property is free from title defects. There might be concealed defects that can affect the title to the property, such as description errors, forgeries, defective acknowledgements, and clerical mistakes.


Home warranty is basically the service contract, covering the replacement or repair of appliances and system component breakdowns that occur frequently. At times, the previous owner provides home warranty once the new buyer pays for the purchase. Such policies are usually prepaid, generally a year in advance. When there are problems regarding home warranty, the buyer will call the firm that offered him home warranty and this firm will call the provider.

Service providers usually fix the issues when it comes to home warranty. However, the home owners will have to pay a fee to service providers. Sometimes, the claim can be denied, as in the case of code violations, unusual tear and wear, improper maintenance, and improper installation. 

Seller Disclosures

During commercial real estate dealings, if the seller does not disclose known flaws of the property, it can result in criminal and civil action. In certain cases, this can lead to cancellation of the entire dealing. The buyer can even file a suit against the seller when he or she finds flaws in the house after the transaction.

So, whenever there are post-closing obligations, it is crucial that negotiation techniques are implemented so that both parties compromise on the matter. If the dispute cannot be managed, then legal action has to be taken.   

Real Estate Influence