The Basics Of Closing - Can a closing be held if either of the parties has not yet met all the conditions to closing?

Yes. This can be done through an escrow closing, which allows the parties to go forward subject to satisfaction of the remaining conditions. In this case, transaction documentation can be executed and entrusted to a designated escrow agent, chosen by the parties, who will break escrow and deliver the documents to the parties as soon as the outstanding conditions are fulfilled.

An arrangement of this nature will require the negotiation and drafting of an escrow agreement among the parties; the agent must clearly set forth the terms upon which the breaking of escrow may occur, and the actions to be taken if those conditions are not fulfilled. Such agreements are particularly useful for special purpose acquisition companies (SPACs) on the verge of acquiring a private company to fold into their public company shell.

Alternatively, the parties may close the transaction if the one that set the unsatisfied condition agrees to waive it and proceed. In some cases, it may be possible for the waiving party to exact some additional concession, such as an increase or decrease in the purchase price (as the case may be), or a pledge from the other party that it will satisfy the condition after the closing.

If the unsatisfied condition is so critical that the deal would unwind were it not to be fulfilled, the prudent path is not to close, since the cost of unwinding a closed transaction or resolving the unsatisfied condition may be much higher than the cost of failing to close.