I have a deal with my buddy Gayle at Old South Land Title. She does residential closings. My office does commercial contracts and closings, unusual closings and closings for our own clients. The reason for the division arises from the contracts we close.
Residential closings usually involve a standard form contract. The form is complex because it has to be. It is completed by licensed people who go to school for what they do. They know their form and their business.
A residential closing is measured by whether each requirement of the contract is performed at closing. When they intake a contract, the Title Company works with the Realtors, Lenders, and others to make sure every detail in the agreement is timely accomplished before closing, or waived. The parties will sign a statement at closing that each requirement has been fulfilled. That is important work, done by closing agents every day, and by the end of the week they’ve earned their weekend.
Commercial and business sale contracts are very different. Most follow no form. The agreements are often negotiated and written by the people involved, sometimes by Realtors acting in a field far beyond their study, or by commercial brokers far more interested in getting a signature than in spending time with detail. Almost without exception the process will work best if an experienced lawyer represents each party during the contract and certainly at closing. There are too many choice points in drafting commercial documents for any lawyer to fairly or ethically represent both sides.
The quality of a commercial closing is usually not measured not by what the agreement says, but by what the agreement should have said, but did not.
Residential contracts agree to convey land. Commercial contracts likely agree to do that too, but they involve issues of licensing, personnel, competition, personal property, goodwill, and all the other details of a lifetime of the seller’s effort. Unfortunately, unless the craftsmen who make the transfer happen are experienced and careful, the parties will spend a lot more time and money trying to define their rights after closing than they would have if both had been represented by counsel during negotiation and at closing.
Residential and Commercial agreements may both be “contracts”. But an ordinary garden lizard looks a lot like a small Florida gator. One of them is harmless. The other is not.
Mike Chesser is President of Chesser & Barr, P.A. and Old South Land Title, Inc., both in Shalimar, Niceville and Crestview. He is Board Certified in Real Property and Local Government Law and can be reached at firstname.lastname@example.org. All articles are indexed and can be found online at www.chesserbarr.com/blog/.