6th Mar 2015
Commercial Property Pitfalls – An Ounce of Cure…
Maybe you are a small business looking to own as opposed to rent, or maybe you are looking to become a commercial landlord and rent to others. No matter the reason you might be buying commercial real estate, it is important that you know what you are getting into.
Commercial real estate can have many moving parts and just as many pitfalls for unwary purchasers. When buying, it is important that you are not unknowingly taking on the seller’s problems and liabilities. Is the tenant renting out the premises behind on their rent? Perhaps an addition was built without pulling building permits. Is the building zoned for the types of businesses that will be operating from the property? Are there any fire code violations against the property?
In this three part series on commercial property, we will be examining the process of purchasing commercial real estate and how an experienced lawyer can help you navigate the process. This first article will deal with the Purchase Contract. The next installment will take a look at due diligence searches and investigations. Lastly, the third and final part of the series will look at closing the transaction.
You’ve found the perfect property and now you are ready to sign on the dotted line. Hold on… not so fast! Have you had the opportunity to get proper legal advice regarding the form of agreement you are about to sign? While an experienced real estate agent or broker may have explained the form of offer to you, it is always important to get legal advice regarding the Purchase Agreement before you sign. Commercial real estate is a significant investment and having a lawyer review a form of agreement prior to signing can save you money and headaches later on. As lawyers, we often have clients come to us with a fully signed and accepted Purchase Agreement in hand. Once we have had an opportunity to review the agreement, legal problems and issues not dealt with in the Purchase Agreement often begin to rear their heads. When we bring these issues to our clients’ attention their reaction is often the same: “Well, help me fix it”. While we will certainly do our best to help our clients fix things, our hands may be tied. Once the purchase agreement is fully signed and in place, it is extremely difficult, and often impossible, to re-negotiate the terms to help our clients.
In short, while many clients are hoping to save a few bucks and bring their lawyer a fully signed and executed Purchase Agreement, we often find that clients wind up paying for it in the end. Problems that could have been avoided at the outset begin to pop-up and clients incur larger legal fees as a result.
It’s true what they say: “an ounce of prevention is worth a pound of cure”.
If you are interesting in purchasing real property, whether commercial, industrial or residential, allow us to look after you and your best interests from the very beginning.