Real Estate Transactions: Knowing The Differences Between NC and VA
Jan 12, 2024
Getting to grips with real estate transactions? It’s key to know that rules can vary from state to state. Here, we’ll walk you through the unique aspects of the commercial real estate transaction process in North Carolina (NC) and Virginia (VA). Let’s get started.
What is a Commercial Real Estate Transaction?
A commercial real estate transaction is a process where parties buy, sell, or lease property for commercial purposes. This process typically involves several steps:
- Market research and property identification.
- Negotiations occur, contracts are drawn up, and due diligence is performed to ensure the property is a good investment.
- The deal is closed by transferring the property title or signing the lease agreements.
READ OUR CHECKLIST: Closing the Deal: Commercial Real Estate Transaction Checklist (nexgentitle.com)
How They Differ in NC vs. VA
North Carolina (NC)
In North Carolina, the commercial property transaction process is characterized by:
- The attorney, who reviews all contracts, conducts title searches and oversees the closing process.
- The protection of the buyer’s or leaser’s rights and the fulfillment of all legal obligations.
- The settlement agent (often the attorney) who disburses funds, records deeds, and synchronizes the closing process.
In Virginia, the commercial real estate transaction process differs in the following ways:
- There is no legal obligation for an attorney’s involvement on the buyer’s side. Transactions can be managed entirely by real estate agents and settlement agents. The bank will generally have the lender’s counsel review the loan and transaction documents.
- The settlement agent is normally chosen by the buyer and is usually a commercial title agency experienced in these transactions.
How the Costs Differ in NC vs. VA
- Closing Costs: In NC, closing costs usually range from 2% to 5% of the property value, while in VA, they tend to be slightly lower at 2% to 3%.
- Property Taxes: NC generally has lower property taxes than VA. This difference can substantially influence the overall transaction cost.
- Recording Fees: The state and city/county charge recording fees based on the loan amount and sales price, which tend to be higher in Virginia.
- Legal Fees: Given that attorneys play a more prominent role in the NC transaction process, legal fees in NC can be higher than in VA.
- Inspection and Survey Fees: These vary in both states and are influenced by the property’s size and location. Be sure to obtain estimates for 2-3 vendors before choosing.
- Title Insurance: This cost varies in both states, typically influenced by property value and the insurance provider. In general, Virginia rates tend to be 20-30% higher than in NC.
Performing Real Estate Transactions in VA
In Virginia, title agencies can act as settlement agents for commercial real estate transactions, which was made possible due to a change in statute from the ’90s that allowed non-lawyers to conduct transactions under Chapter 55.1 of the Virginia Code. At NexGen, we facilitate commercial settlement transactions, act as escrow agents, and provide title insurance policies to protect the new buyer and their lender pursuant to these rules and regulations.
Thanks to modern technology, we can now perform most title searches online. This advancement significantly reduces the time and costs associated with the title exam and helps speed up the due diligence process.
Performing Real Estate Transactions in NC
In North Carolina, attorneys are more involved in the process, providing title searches and transactional oversight. Attorneys also act as the settlement agent on all residential transactions; however, in commercial transactions, a qualified title agency (like NexGen) can provide those services as well as the attorney. NexGen collaborates with real estate attorneys for all NC title searches and solicits the assistance of underwriting counsel as needed on complex issues. We help manage the over-costs associated with the title and settlement process and streamline the process with efficient oversight.
While we primarily operate in VA and NC, NexGen’s reach extends beyond these borders. Our capability to facilitate services for any state reflects our competence and reliability in the complex realm of commercial real estate transactions. Simplify the commercial real estate process with us. Contact us to get started!