Gap closings are those transactions where, after documents and funds are delivered, there remains an interval of time before recording of documents. As with traditional closings, a title policy is issued insuring title typically from the date of the most recent title commitment. The title insurance company insures the “gap” in time between the closing table and recording of documents.
The risk in any such scenario, and which party bears that risk, is that an intervening matter of record, or title, such as a tax lien or a judgment against the seller, may be recorded between the time of closing and when closing documents are recorded; the result being that the buyer may not receive the quality of title that it has negotiated, after which it will look to its title insurer for coverage.
READ MORE: https://www.sherin.com/real-estate/2013/02/12/gap-closings-a-commercial-real-estate-necessity/
