I85PREP
⌘ K
C-RETS study materials
C-RETS study resources

C-RETS: Transaction Management

C-RETS · Work through your exam, one topic at a time.

All guide sections

Transaction Management

Transaction Management

This domain tests the sequence and documents that move a commercial deal from term sheet to closing: LOI, purchase and sale agreement, due diligence, financing, escrow, title, and prorations. The exam rewards knowing what is binding, what is contingent, and what must be delivered before money moves.

Core rules

  • LOI is generally nonbinding except for confidentiality, exclusivity, and sometimes expense provisions. The PSA is the binding contract and controls.
  • Due diligence typically covers title commitment, survey, Phase I environmental site assessment, zoning, leases/estoppels, service contracts, and physical inspection. A Phase II ESA may be triggered by recognized environmental conditions.
  • Earnest money is held in escrow. It is often refundable during the due-diligence period and becomes hard (nonrefundable) after expiration, subject to financing or other contingencies.
  • Estoppel certificates confirm lease terms, defaults, and offsets; SNDAs protect lenders by subordinating the lease and obtaining tenant recognition.
  • Closing prorations allocate rent, operating expenses, real estate taxes, and CAM reconciliations between buyer and seller as of closing.

Worked example

Buyer signs an LOI on Day 0 and a PSA on Day 10. Due diligence runs 30 days from PSA execution (through Day 40); financing contingency runs 45 days (Day 55); closing is Day 60. The buyer deposits $50,000 earnest money at PSA signing. If the buyer terminates on Day 35 for a Phase I finding, the deposit is refundable. If the buyer waives due diligence on Day 40 and then fails to close without a financing contingency, the deposit is at risk. Prorations at closing credit the buyer for prepaid rent and charge the seller for accrued expenses.

Traps

Treating the LOI as binding; missing tenant estoppels or rights of first refusal; ignoring CAM reconciliation and tax prorations; assuming a financing contingency survives closing; and miscalculating 1031 exchange deadlines-45 calendar days to identify, 180 calendar days to close.