Gap closings have been a significant aspect of commercial real estate transactions and loans. As a lender lending a large sum to a borrower to purchase a property, you need to be well informed on how to use gap closings to enable the remote conveyance of the real estate backing the loan you are giving out efficiently.
Gap closings refer to transactions in which there is a little time difference between the delivery of necessary documents and lender’s funds for the property and the completion of their documentation. Various scenarios can lead to this gap. For instance, these gaps can occur when the buyer, lender with the loan, and seller of property stay in different locations and the property involved is in a different state entirely.
The inherent danger of gaps is the pressing issue of record or title, such as liens or adverse decisions against the seller, which are documented between closing and recording. If something comes up on the title between closing and the recording, the buyer and lender may not receive the quality of the title that was agreed upon.
In gap closing instances, the lender should additionally verify that the closing instruction letter obligates the title firm to issue the policy as negotiated, regardless of any further intervening matters of record. Also, the lender should never accept a gap closing without having a gap coverage in place.
If you want to learn more about gap closings as a lender looking to give out loans for real estate transactions, you should endeavor to click this link to read more
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