For Commercial Real Estate
Real estate law can be complex, especially when it comes to the sale or leasing of a property that is meant for commercial use. They often result in large transactions because many of them are expensive. As a result, there is more pressure for the agent to get everything right.
Laws related to commercial real estate will vary from state to state, so it might be difficult for an agent from one state to sell commercial properties in another – even if he or she holds an active license.
Things to Consider
Before you decide to sell commercial real estate, you want to make sure you’re using the correct terminology in any documentation related to the sale. Every state has different requirements, and the terms (while they may mean the same thing) will also vary. Having a qualified real estate attorney is the best defense against any issues that may come up down the road.
You should also make sure you disclose any information about the property to everyone who is involved in the sale. Every detail should be presented truthfully and accurately, especially when it relates to the following:
- Utility usage
- Square footage
You should also make sure you keep any “fiduciary duties” that you have agreed to, and you should work hard to get the best possible deal for both the buyer and the seller.
Common Legal Issues
Selling commercial real estate can be a lucrative venture, but it has a higher risk for legal action. Most of the lawsuits are related to the sale of the property, but there can be other reasons as well.
Here is a list of some of the common legal issues related to commercial real estate.
Accurate property valuation
Commercial properties are often unique, so it may be difficult for someone to compare values to get a more accurate estimate of what the property might be worth. Also, any income being generated from a commercial property can also be a factor in this type of lawsuit.
The best line of defense is to use an appraiser – someone who can give a more accurate estimate of the property’s actual value. It may not eliminate your chances of getting this type of suit, but it’s an excellent step toward minimizing it.
Commercial real estate transactions require a great deal of investigation, so the buyer can find out about any possible issues with the property. These can include, but are not limited to:
- Zoning – Is the use of the property in compliance with current zoning laws?
- Title – Does it identify any liens or easements related to the property?
Be sure to talk to a real estate attorney about any of these possible issues.
Assumption of liability
You always want to make sure you are not taking on any liabilities that may be associated with the property. There may have been some past illegal activity that you could be held liable, even if you are innocent.
You could also be held liable for any environmental hazards on the property, which you may be obligated to eliminate. And it could get expensive.
Commercial real estate can tie up a great deal of liquid assets for a long period of time, as there may be some difficulty in filing vacancies and collecting rent. This could result in you not being able to make the necessary payments on the property. It may also be difficult to sell the property if you find yourself in a financial bind. For this reason, you should carefully evaluate the risks before you decide to buy a commercial property.
Using a Real Estate Attorney
Buying and selling commercial real estate is not without its risks, and it’s critical that you understand them. But most importantly, you should take measures to protect yourself from any legal issues that may arise from a transaction. A qualified real estate attorney will be your best line of defense against these types of lawsuits, as he or she will know the ins and outs of real estate law.
If you want to find out more about how we can help you, get in touch with us today!