CHCP Commercial Closing Differences 3

Question 1

In a commercial closing involving a multi-tenant building, what document assigns existing leases from seller to buyer?

Accepted Answer

Assignment and Assumption of Leases

Answer

An Assignment and Assumption of Leases transfers the seller's rights and obligations under existing leases to the buyer at closing.

Question 2

What is 'prorated rent' in a commercial closing and who typically benefits when closing mid-month?

Accepted Answer

Rent is split proportionally between seller and buyer based on the closing date

Answer

Rent collected for the month is prorated at closing so the seller receives payment through the closing date and the buyer receives the remainder.

Question 3

What does 'SNDA' stand for and why is it important in commercial real estate closings?

Accepted Answer

Subordination, Non-Disturbance, and Attornment Agreement

Answer

An SNDA agreement defines the relationship between tenants and a lender, protecting tenants from eviction if the landlord defaults on the mortgage.

Question 4

In commercial closings, what is a 'CAM reconciliation' that buyers must understand before taking ownership?

Accepted Answer

A calculation of outstanding Common Area Maintenance charges owed by tenants

Answer

CAM reconciliation determines whether tenants owe additional charges or are owed credits based on actual versus estimated common area maintenance costs.

Question 5

How does the closing timeline for a commercial transaction typically compare to a residential closing?

Accepted Answer

Commercial closings generally take 60–180 days due to due diligence, financing complexity, and legal review

Answer

The complexity of commercial deals, including environmental reviews, lease analysis, and complex financing, extends timelines well beyond typical residential closings.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Commercial Closing Differences 3