Commercial loan costs after not closing

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Commercial loan costs after not closing

Account Closed
Rental Property Investor · Member since 2021 · 3 posts · 1 vote

This is my first time dealing with a commercial loan for a property that I was going to buy. Due to the appraisal and other factors, I had to terminate the deal.

However, after a week, the bank that I was using is sending me invoices for their lawyers and other costs that they incurred when working on the deal.

I certainly wasn’t anticipating them charging me for every little thing from their end.

Is this normal practice?

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  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    4y

    @Account Closed

    No.  Not normal at all.  Those expenses are considered a "cost of doing business".  Any lender who imposes them on a borrower is not worth doing business with to begin with.

    Cheers!

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  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    4y

    Commercial appraisal $1500 -6000 non refundable. Real estate attorney at $350 an hour not refundable. Credit reports and supplements (credit report $40 supplements each $150) Environmental Phase I $4000 Phase II $6000- 40000. Commercial loans are not regulated the same as residential.  I am sure you signed something with "The bank" to pay the hard costs

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  • Sarah Barrett
    Lender · Kansas City, MO · Member since 2022 · 25 posts · 13 votes
    4y

    Did you sign a term sheet? I would reference that for costs you are responsible for covering. It is normal for a bank/lender to pass 3rd party costs such as title, appraisal and any environmental or structural engineer inspections onto the borrower as these would be fees you would be responsible for paying at closing. a lender would quickly go bankrupt if they covered the cost of these items with every lost deal. If the loan didn't close, I'm not sure what the attorney's fees incurred would be as they aren't usually pulled in until it is time to prepare closing docs. Talk to your lender to find out what exactly the fees are and ask for original invoices from the 3rd party vendor.

    Good luck!

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  • Account Closed
    OP
    Rental Property Investor · Member since 2021 · 3 posts · 1 vote
    4y

    @Caroline Gerardo

    The only thing I signed was a financial statement that disclosed my assets to start the application. After that, I don’t have any other documents signed for them.

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