An excellent article describing some of the details involved in closing a commercial real estate sale when a conduit loan is to be paid off using a defeasance process appeared in the May 2007 issue of “WESTERN REAL ESTATE BUSINESS�. The article can be found at www.westernrebusiness.com/articles/MAY07/feature4.html. It is entitled:
              A DECISIVE DISPOSITION SAVES TIME AND MONEY by Betsy Ross
The article advises that it typically takes 30 days to do a defeasance (the process whereby the seller of a property encumbered by a conduit loan has someone find a substitute security to replace the loan in the lenders portfolio and enable the seller to pay off the loan). The actual closing of a defeasance transaction in the same escrow as the sale transaction usually takes 3 days and it is important that the timing issues be agreed upon by buyer and seller in the purchase contract and escrow instructions.
To avoid problems in transactions that involve short due diligence periods and buyer deposits that become non-refundable after this period expires it is important that the buyer and seller agree in advance about the coordination of the defeasance with the sale escrow. It is also important that the seller obtain the buyer’s agreement to cooperate with the seller’s defeasance process including having the buyer’s funds delivered to escrow one day in advance of the close to accommodate the defeasance process.
The reader is referred to the article for more details on coordinating the sale and defeasance process.
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