Purchasing a commercial property can be an exciting prospect. As with any endeavor, some common legal issues crop up from time to time.
You should always be aware of these issues and protect yourself accordingly.
You need to be aware that you could be inadvertently assuming the liability of the previous owners in any commercial real estate transaction. To avoid this, do your research. Make certain there are no environmental concerns, outstanding cleanup or other issues with the property itself. Although these do not always stop the sale, make sure that the liability remains with the previous property owner.
Defects in the title
A title search is a must for any real estate transaction. Sometimes, sellers might not even know about hidden defects in the title. The title search should uncover all of these issues. Without it, you could be buying a property that you can’t sell or take possession of because it has a mortgage or lien on it.
Representations and warranties
Factual statements and promises of indemnities against false statements are representations and warranties, respectively. You should verify every representation and warranty in your contract. Sellers often want as few of these as possible. They might include things like property income and condition.
Although you can deal with many zoning and land use issues, some may stop or severely delay your plans for the commercial property. Make certain the zoning suits your business needs or that you are at the very least aware of any possible zoning issues.
Although additional legal issues might crop up during a sale, these are the most common. Make sure that you understand them before signing any contract.