Chicago Title NCS Chicago: SYFCREC 2021

A new client, Daring Developer, LLC is interested in purchasing a commercial property located at 123 ABC Road, Chicago, IL. The property includes an existing apartment building, together with leased retail units and a parking facility on site. What initial questions do you have for your client regarding the prospective purchase? General Description Daring Developer, LLC is organized in Delaware and has one investor, Irene Investor. The proposed purchase price of the Property is $40,000,000. The purchase will be financed with $15,000,000 in equity proceeds from Daring Developer, LLC and a $32,000,000 loan. $7,000,000 in loan proceeds will be held for future costs. In order to secure the purchase of the property from Stellar Seller (the Seller), Daring Developer, LLC has agreed to deposit $500,000 in earnest money proceeds in escrow. You contact the Chicago Title NCS office in Chicago, IL to assist with closing and underwriting this transaction. As part of the underwriting for this transaction, Ursula Underwriter requested an ALTA Statement from Stellar Seller. In Section 1 of the statement, the seller disclosed elevator repair work that had been done within the last 6 months. Stellar Seller entered into a $300,000 contract with Excellent Elevator Services for elevator modernization work. The work has been completed; however, the final retainage pay application in the amount of $50,000 has not been paid. 1. What additional information/documentation should Seller provide? 2. What documentation does the Title Company need for the Seller’s work? 3. What is required to address the outstanding unpaid balance to Excellent Elevator? After the purchase of the property, there will be a $7,000,000 balance on the loan. Daring Developer stated that the $7,000,000 will be used to finance renovations to the existing building. The Buyer plans on upgrading the individual units, adding a rooftop deck, and improving the common areas. Prior to closing, Daring Developer entered into contracts with Amazing Architects and Illinois Engineers for preconstruction work. 1. What is required to provide the lender with mechanic’s lien coverage for the Borrower’s anticipated work? 2. What is required for the lender to receive a date down endorsement? CASE STUDY 1