Purchasing or selling a commercial property is a major move, so it’s not one to treat likely.
Still, some investors choose to sell their commercial properties without first consulting a real estate attorney.
Commercial property is a big investment, and transactions involving them are intricate and complicated. Therefore, when you’re buying or selling a commercial property, the details matter.
Here are six compelling reasons why it’s smart to hire a lawyer to help oversee your commercial real estate transactions.
Let’s dig in!
1. It’s All in the Details
Details are an important part of any property transaction, but it’s especially the case in a transaction involving a commercial property.
That’s because purchasing a commercial property involves more potentially risky and varied requirements than you’d face when selling or purchasing a house.
For instance, searching for the perfect commercial property can be arduous. On top of that, once you finally decide to buy a property, you do so with the realization that you will forgo other possible opportunities.
In addition, because transaction details are so critical to any property buyer, you’ll go through a grueling period of preparation and research prior to closing on your property. The process is time-consuming and eats up both resources and money.
The worst thing that can happen is that the other person — either the buyer or the seller — decides to back out of a deal, or you discover a deal-destroying detail. In this situation, you would have wasted all kinds of money and time that you won’t get back.
This is why a real estate attorney is so important.
Your attorney will assist you in navigating your deal and making it work. But the attorney will also safeguard your interests in the event that things do not work out as planned.
If your deal doesn’t close as a result of something that the other person has done, your lawyer can negotiate ahead of time to make sure that you can recover any losses you incur. In this situation, the other person would have no choice but to pay you damages.
With a real estate attorney’s help, you can rest assured that your pocketbook and best interests are safe from start to finish.
2. Expert Eyes on the Property Are Everything
Before you buy a commercial property, your attorney can help you to vet the piece of real estate to make sure that it truly meets your expectations and needs.
This includes physically examining the property.
Examining a for-sale commercial property will help you to spot any issues that might not have shown up in a property survey or title search. A real estate attorney will ensure that a trained professional conducts the examination — a professional who can spot things you cannot identify on your own.
3. Price Negotiation and Handling Other Details Can Be Tough
Trying to negotiate a price for buying/selling a commercial property can be an extremely emotional and complex ordeal. But handling the many other details involved in commercial property deals can be just as complicated.
A few questions you’ll have to tackle include the following:
- How can you be sure that a title that is free from encroachments will be delivered?
- What kinds of warranties are obtainable to protect you against concealed environmental issues?
- How much should be paid in damages if something compromises the deal?
- What happens if structural problems emerge after closing?
The reality is that the other person involved in your property transaction will probably have an attorney prepared to go to battle for him or her and his or her interests in these areas. You need to do the same to protect yourself and mitigate your risk.
No matter what you may be facing in a transaction, your attorney knows the law’s intricacies and will push for the most ideal resolution for you.
4. You Might Overlook Something Important
Even if you’ve been through a commercial property transaction before, you’ll likely come across survey, title or lien issues that you might not understand. And if you’re like many real estate investors, you may neglect these issues in your rush to seal the deal.
However, these problems will come back to haunt you later, as you’ll have to resolve them before getting to the closing table.
For example, let’s say you’re getting ready to purchase some real estate. Your attorney may identify, address and resolve a problematic use restriction that would prevent you from operating your business on that particular property.
In other words, with your attorney’s counsel and expertise, you can avoid purchasing a property you couldn’t even use.
5. You May Need to Modify Your Agreement/Document
A real estate attorney is also invaluable when it comes to reviewing a complex sale or purchase agreement. In addition, your attorney can help with reviewing closing documents or other documents related to problematic and non-customary conditions and terms.
Then, your attorney can help you to modify your document/contract to remedy the issue. Alternatively, your attorney may advise you regarding your options.
6. Reviewing Leases Is Essential
Another important thing to review during a commercial property transaction is tenant leases.
If you’re the buyer and your target property contains tenants, it’s in your best interest to get copies of the current leases. You’ll need to go over these leases to see if the rents that the tenants are paying will cover your property ownership and operating costs.
Reviewing the leases is also critical for determining the rights that various tenants have to purchase their spaces, expand their spaces or renew their existing leases.
In addition, it doesn’t hurt to examine the tenants’ identities to see if these individuals are indeed creditworthy and can honor any obligations spelled out in their various leases.
Also, has any tenant defaulted under his or her lease? And has the seller initiated litigation against any tenants? These are other important questions that your attorney can help you to answer.
How We Can Help with Commercial Real Estate Transactions
We offer top-of-the-line services for both buyers and sellers involved in commercial real estate transactions.
Contact us to find out how we can help you to successfully navigate your next transaction in South Carolina.