Residential vs Commercial Closings

     From homes to large commercial properties, at Monarch Title company, we do it all. With 17 years of experience, we are comfortable working on any type of closing. So, are traditional residential closings and commercial closings all that different? The answer, yes. Closing on a commercial property is much more involved and regulated than closing on a home. Here is a breakdown of the similarities and differences.

  1. Use
  • Residential properties are purchased for individual use to provide housing for families.
  • Commercial properties are business focused, these properties are sold, leased, or used for business purposes.
  1. Process
  • A traditional home closing is systematic and regulated from home to home.
  • A commercial closing is complex due to the number of parties involved including the buyers, sellers, attorneys, corporate members, board members, assigned signors, and more!
  1. Regulation
  • Residential transactions must follow RESPA – the Real Estate Settlement Procedures Act, a federal law that governs residential home sales.
  • Commercial closings do not have to follow RESPA but require more due diligence between buyers and sellers prior to closing. Commercial closings must follow all zoning requirements, complete seismic risk assessments to measure the risk in case of earthquakes, complete environmental site and property condition assessments, and numerous ALTA (American Land Title Association) title endorsements. There is no RESPA compliance requirement to structure a deal, but it does require attorney involvement to draw up a contract.
  1. Parties Involved
  • A traditional home sale has the buyer, seller, title/escrow company, and lender.
  • A commercial closing has the buyer and their attorney, the seller and their attorney, the lender, title/escrow company, corporate officers, board members, and assigned signors.
  1. Contract
  • Residential closings have standardized sales contracts.
  • Commercial closings must have a PSA (purchase and sales agreement). This agreement is more customized and is between numerous parties, corporations, LLC, LLP, and more.
  1. Final Steps
  • The final steps for residential closings are a home inspection and an appraisal.
  • There are quite a few remaining steps for commercial closings. These include a survey, execution of assignment and assumption of leases, UCC (uniform commercial code) filing, zoning reports to ensure its intended use is properly zoned, special ALTA coverages, access and entry by easement, and environmental reports to check for hazardous substances or contamination.
  1. Clear Title to Close
  • After all of that, both residential and commercial transactions are cleared to close.


Obviously, commercial closings are much more involved due to the number of parties involved. If you have any questions about commercial closings, shoot us a message or give us a call. We want to help you with all your title needs here in Missouri.