Are Closings Happening?
By Wendy W. Kraby, Senior Associate, GDCR Attorneys at Law.
With social distancing and work-from-home realities, are business and real estate closings even happening during the Covid 19 concerns?
As of the date of this writing, both business and real estate closings in Georgia are able to be processed during this time. However, parties need to be patient, flexible and proactive. The overall situation is very fluid and requirements and restrictions are rapidly changing.
Banks, accountants, law firms and other professional offices are — by and large — up and running. However, some services may be temporarily delayed as offices balance their work staff. Many employees are working from home, using their personal cell or home phones, so note that your caller ID may not be picking up the true caller.
Last week, my phone noted that I was getting calls from a “Rodney” in New York. I assumed it was a sales call or wrong number. Turns out it was a bank officer with Chase Bank calling to discuss resolving a client’s legal issue. I had eagerly been awaiting a call from the bank.
“I’m so sorry to call from my personal home,” Rodney said as his dog barked in the background, “but our entire staff is working remotely right now.”
We resolved the issue and I was told that I would be sent a follow up letter confirming our agreement. However, Rodney said the letter would take about two weeks or more to come, because he was unsure who was in the office to physically mail it.
We both lamented that this is our reality. But ultimately, the issue was resolved, and the client was pleased.
Note that other than closings in which documents need to be signed, law firms and other professionals have quickly moved to almost all meetings being by phone conference or video conferencing.
When closing a real estate deal, the requirement is to record in the public records any property transfer deeds or financing liens as soon as possible after closing. However, with many Georgia courthouses closed to outsiders or closed completely for cleaning (such as DeKalb County), how are original documents to be submitted for recording? Most counties in Georgia are now able to accept online filing of deeds and most law firms and title companies have transitioned easily to this. For, counties that do not have online filing or who are not able to accept mailed deeds for recording, major title companies have stated that they will insure over the “recording gap” (the time between when a deed was signed and when it is recorded in the public records) with signed indemnities from the parties involved.
While some closing documents, such as closing statements, can be signed remotely, real estate deeds and security deeds in Georgia normally must be signed, witnessed and notarized in person. That is, the signer, witness and notary should all be in the same room and actually see the signing take place. On March 31, the Georgia governor issued an order to allow video notary signing under certain conditions.
At our firm, we schedule closings to make sure there is only one closing at a time in the office, which closings take place in a designated open-air area that is sanitized before and after each closing. We have the signer, witness and notary (and attorney) each sit at the same table, but separated to different corners of the large table, each with their own blue pen. Proper social distancing is maintained, and we have set up so that only one “touch point” to allow people into the building is needed.
There is no legal requirement that Seller and Buyer sign at the same time or even sign in the same room.
For a recent closing in which we represented the Seller, she signed in our office the day before closing and we sent her documents via overnight delivery to the closing attorney, who had the Buyers come into the closing office the next day. The closing proceeded with no issues and the bank wires were delivered quickly.
According to Georgia law (O.C.G.A. § 10-12-7), parties to a contract (not a land deed) can sign electronically through an app or program. I do not recommend this unless both parties have a provision in the contract that signing electronically is specifically permitted. Proving in a Georgia court of law that someone has actually signed a document electronically is not well established. For real estate and business closings, there are typically numerous documents to be signed. It is still recommended that closing documents be hand-signed by the parties.
To date, our firm has found lending institutions to be very willing to move forward with previously scheduled closings – both for real estate and business purchases. I recently spoke to the president of a local community bank who said, while it did not let the community inside the bank without an appointment, the bank is very much open and still lending — although some employees are working from home.
Wendy W. Kraby is a business and land development attorney at Gregory, Doyle, Calhoun & Rogers, LLC in Atlanta and is an affiliated professional member of GABB. https://www.gdcrlaw.com/wendy-w-kraby
Three CPAs from Frazier & Deeter spoke at the May 28 Georgia Association of Business Brokers meeting about the emerging cannabis industry as well as other tax programs that affect both buyers and sellers of businesses.
Matthew Foster, CPA, Tax Partner at Frazier & Deeter and the firm’s National Practice Leader for the Cannabis Industry, discussed the emerging cannabis industry in Georgia, including tax issues and obstacles to financing. Andrew Moore, CPA, Senior Manager of the Tax Department at Frazier & Deeter, discussed film credits, low income housing credits, opportunity funds, and syndicated conservation easement transactions, all of which can lower the taxes due after the sale of a business. Jennifer Gruner, CPA, tax partner in Frazier & Deeter’s Real Estate Group, covered opportunity funds.
Linked here is a copy of their presentation. Credits CPAS Cannabis Presentation To GAAB_05252019
The Georgia Association of Business Brokers meets at conference room hosted by the Georgia Association of Realtors at 6065 Barfield Road, Sandy Springs, GA, 30328. The monthly GABB meeting is free and open to the public and is preceded at 9:45 a.m. by a free light breakfast and networking session. The meeting will last from about 10:30 to somewhere between 11:30 and noon. Please fill out the form below if you are not a GABB member but wish to attend our meeting.
While Andrew specializes in working with small and middle market companies and their related owners, his background allows him to serve a broad client base from smaller “mom & pop” type establishments to much larger corporate conglomerates. He has extensive experience helping clients recognize and implement tax saving opportunities and prides himself on recognizing opportunities often missed by others. Prior to joining Frazier & Deeter, Andrew led major initiatives that include helping clients implement the IRS Tangible Property Regulations and filing related accounting method changes which resulted in his clients saving millions of dollars in taxes.
At Frazier and Detter, Andrew is an active member on the pass-through team and participates in the overall delivery of tax compliance, consulting and planning services offered by the firm.
Before joining Frazier & Deeter, Andrew spent just over nine years working with clients in the automotive, manufacturing & distribution, trucking, legal, technology and service based industries at various other accounting firms in Atlanta.
Matthew Foster is a Partner in the Atlanta and Las Vegas office tax practices and serves as the firm’s National Practice Leader for the Cannabis Industry. He has over a decade of experience in public accounting, with the majority spent practicing at Frazier & Deeter, LLC.
Matthew’s primary areas of focus are middle market companies that are privately owned or backed by private equity. His tax expertise in this area has allowed him to help his clients with various opportunities, such as corporate structuring for tax strategies, mergers and acquisitions, joint ventures and ESOPs. His clients operate in a variety of industries including, but not limited to, manufacturing, distribution, technology, real estate and construction.
Jennifer Gruner has more than 11 years of public accounting experience, which includes five years with Ernst & Young’s real estate tax compliance department. Jennifer has a wealth of experience with tax compliance for small to large national real estate developers, builders, investors in commercial estate and the individual partners of those firms. In addition, she has signification experience with various types of investors of real estate deals, including foreign and domestic individuals, syndicators, foreign and domestic funds, including tax exempt investors and REITs.
Jennifer has extensive knowledge of limited partnerships, limited liability companies and family partnerships with multi-tier structures operating or investing in various states. She also has experience with complex partnership allocations and waterfalls, technical terminations, sale of assets, depreciation and federal and state withholding for foreign and domestic investors.
The GABB is the state’s largest and oldest association of professionals who specialize in brokering the purchase and sale of businesses and franchises. Broker members help owners determine the asking price of their business, create marketing plans and strategies for selling their business, identify and qualify buyers, and have the knowledge, experience and skills needed to help maintain the confidential nature of the process. The professionals of GABB relentlessly pursue professional development so they can provide superior, ethical services for all customers and clients. Affiliate members include bankers, lawyers, appraisers, insurers and other professionals like Mr. Moore who work closely with brokers to help owners and buyers get to the closing table.
For more information about GABB, please contact GABB President Dean Burnette at 912-247-3209 or firstname.lastname@example.org, or GABB Executive Director Diane Loupe at email@example.com or 404-374-3990.Read More
The information provided below is excerpted from the Pratt’s Stats Private Deal Update: 4th Quarter 2015, which is copyrighted by and available exclusively from Business Valuation Resources, LLC. Brokers who contribute transaction details to Pratt’s Stats on closed business sales receive the complete Private Deal Update plus three months of free access to the database for each deal included in Pratt’s Stats.
The quarterly Pratt’s Stats Private Deal Update (PDU) provides general trend information on valuation multiples and profit margins for transactions in the
Pratt’s Stats database, available exclusively through Business Valuation Resources, LLC (BVR) at www.BVMarketData.com
Pratt’s Stats, published by Business Valuation Resources, LLC, is a great resource for GABB members.
While GABB no longer get complimentary access to this valuable service, members who submit qualifying sales can get free access from the company. GABB also requires Million Dollar Club members to submit their deals to Pratt’s Stats as a qualifying condition, and we encourage all members to submit their deals to Pratt’s Stats.
Business brokers find Pratt’s Stats a valuable tool. It offers market comparables, shows the Broker’s client the resources the Broker has, which helps clients trust the Broker’s experience, and provides a great gut check as to what businesses really sell for.
For example, when you are looking at a home, do you trust your Realtor with just giving you a number to buy a house? Or do you compare it to other homes in the area to see what the value should be
Some brokers have told us that they find it difficult to submit deals to Pratt’s States. A Pratt’s contact estimated “it would take a max time of 15 minutes for every deal. But for a broker who just finished the deal, is familiar with the deal and the organization of the file, I would say it takes less time.”
Pratt’s is willing to help brokers write up the deal for anyone who wants to submit. So if a broker has files on the computer (PDF, Excel, etc…) the broker can then email the files to Pratt’s and they will write up the deal.”
As of February, 2017, the Pratt’s Stats contact is Mitchell Cameron, Senior Financial Analyst at Business Valuation Resources, LLC.