Real estate is a complicated area of the law, and there are many different steps you must take to ensure a transaction is valid and your rights are protected. An attorney can help you understand the ins and outs of commercial financing, buying, selling, and developing a property. Some people might think that buying or leasing a commercial property would be similar to that of a house or apartment. But if you have any experience with commercial real estate, you know that is not the case.
Commercial real estate comes with many more requirements and potential complications than a typical residential real estate transaction. If you are not careful throughout the process, you could quickly end up losing a great deal of money, along with facing other legal and financial repercussions. To ensure your rights are protected and minimize the chance of any problems occurring, you will want to talk to an attorney who knows the ins and outs of commercial real estate law.
What is a Real Estate Transaction?
A commercial real estate transaction is any deal between two or more parties involving the purchase, sale, or lease of a property for commercial use. Properties that may be involved in commercial real estate transactions include Small to mid-sized businesses, Office buildings, Large housing units, Healthcare facilities, Educational facilities, etc.
What Does a Commercial Real Estate Lawyer Do?
Commercial real estate transactions necessitate a comprehensive understanding of business and real estate law, real estate and financial transactions, and tax implications. Savvy real estate attorneys will keep you apprised of terms and legalities, and inform you of potential challenges that may arise in the negotiation and purchase process.
A Commercial real estate attorney’s job involves quite a large number of responsibilities and expertise. Commercial real estate lawyers work on a variety of cases, all intended to help protect the rights of their clients, as they pertain to commercial properties, commercial lease disputes, title insurance, estate planning, and more. What a commercial real estate lawyer does, however, really depends on the specific type of commercial real estate that the lawyer specializes in. Specialized services real estate attorneys provide their clients include:
Zoning Laws
Commercial real estate lawyers are often asked to deal with zoning laws. With commercial businesses like restaurants, retail spaces or industrial spaces, zoning issues occur frequently. Zoning laws restrict the ways a property can be used. Property owners sometimes have to hire a commercial real estate lawyer to handle any issues around zoning. Before purchasing a property, buyers and developers should consult a commercial real estate attorney as part of their due diligence.
Commercial Leases
Commercial real estate attorneys work with landlords to draft, review and negotiate commercial leases for your property. Drafting a lease without an attorney is not at all recommended, as you need someone who understands the ins and outs of commercial leases and who can spot potential loopholes or problems in the lease.
Real Estate Development Law
Commercial real estate lawyers also need to have an understanding of real estate development law, which entails land use laws and property development. For instance, attorneys might be called on to help with evaluating the property site, purchasing, securing financing, obtaining permits, and leasing or selling the developed land.
Title Reviews
A commercial real estate attorney will review your title and title insurance, negotiating the best deals to protect your interests and assets. Without an attorney to look at these documents, you may be putting your assets and your business at risk. Title insurance is a critical element of a commercial real estate transaction. A real estate attorney can negotiate the best deals to protect the buyer’s assets.
Lease Agreements
A lease agreement outlines such terms as the lease start date, rent, renewal details, and additional liabilities. Both tenants and owners benefit from enlisting a real estate attorney to review the details of the lease.
Purchase and Sales Agreements
The purchase and sale agreement is the foundation of any commercial real estate transaction. A well-structured agreement will set out clear terms and help prevent misunderstandings. A well-written purchase or sales agreement clearly defines the buyer’s and seller’s obligations, rights, and liabilities. The details of the contract will save you time, and money should conflict arise.
Eminent Domain
Under eminent domain, it is possible the government could take ownership of commercial property for public use. Property owner rights vary by state; an experienced real estate attorney can be a valuable asset when eminent domain issues arise.
Landlord-Tenant Disputes
Disputes between landlords and tenants will happen from time to time. These disputes can quickly spiral out of control. An experienced landlord-tenant attorney can help prevent issues before they arise and help resolve conflicts that do pop up.
Why Hire a Commercial Real Estate Attorney
Commercial real estate attorneys operate to protect individuals and enterprises from financial pitfalls when buying, selling, or leasing commercial property. Most homebuyers rely on their realtor to ensure a reputable local attorney handles the contract’s legal elements.
Closing a commercial real estate transaction can be complicated; from negotiating the purchase price to minimizing the buyer’s or seller’s risk, real estate attorneys protect their client’s interests. Below we offer a few reasons you should consider partnering with an experienced attorney when buying or selling commercial real estate.
Reasons to Hire a Commercial Real Estate Attorney
The process of closing a commercial real estate deal can be very complex, from negotiating the purchase price to protecting the buyer’s or seller’s interests and minimizing risk. Here are a few key reasons why you should partner with an attorney when buying or selling commercial real estate.
Saves Time
As a business owner, you probably don’t have a lot of free time available to figure out the legalities of buying or selling commercial property, nor would you want to. That’s why it makes sense to hire an attorney to perform due diligence, look at the facts objectively, ask the right questions, and take on your worries so you can focus on what you care about most, your business.
Protects Your Interests
When buying commercial real estate for your company, hiring an attorney protects your interests by ensuring the contract is fair. In addition, a commercial real estate lawyer can protect your interest by negotiating exit procedures should the deal fall through and if hidden environmental or structural issues arise after closing the deal.
Ensures the Deal is Legit
If you’re considering buying a piece of property, but you’re worried the price is too good to be true, an attorney can investigate on your behalf. For example, an affordably-priced office building may seem like a great deal, but what if it has $200,000 worth of tax debt? An attorney can research a building or property, check for liens or other issues, and help you avoid making a bad decision.
Prices It Right
Real estate attorneys do not charge on a commission basis over deals, unlike realtors. They are hired for their service to you. Therefore, they are earning nothing from your purchase. They are bound to give you sound advice, protect your interests, and save you money. When you hire a real estate attorney, they help you negotiate on every term of your contract, therefore maximizing your opportunity to save money. Not only do you save money on every deal you make, but you also save a lot of money down the road protecting yourself from making unwise decisions.
Understands Zoning Laws
Local authorities dictate the use of land and construction of buildings, and so there are different land-use patterns. If you’re selling a property, you need to know its land use pattern and the zoning law that applies to it so that you look for the right buyers. A real estate attorney can help you know the zoning laws and understand them to make the right efforts in the right direction. Maximizing your commercial investment means knowing when to buy and sell your property. Zoning laws determine which types of development are available on the property. Knowing your property’s zoning laws makes it simpler to find the right buyer when you decide to sell.
Prepares for Potential Issues
There are chances that you don’t have a lot of experience dealing with purchasing commercial property. If you do, there are still a number of problems that could pop up throughout the process. This includes corporate owners, tenant claims, environmental issues, and leaseholds. Resolving these problems isn’t always a quick process. It’s a lot easier to navigate these dilemmas when you have previous experience with these types of issues. A real estate attorney has the experience you need. If a unique problem pops up, they can steer you in the right direction. That way, these details won’t stall the buying process.
Negotiations
Hiring a commercial real estate attorney also makes it easier for you to negotiate. Purchasing commercial property requires a large investment. In some cases, it can become an emotional process. If you’re not heading into negotiations with a clear head and unbiased point of view, it gets tricky. Your attorney can act as a third party. Their experience with the intricacies of law and negotiations can make it easier for everyone to find a solution.
CONCLUSION
Having a commercial real estate attorney help you negotiate the sale can help you get the most for your money, whether you are buying or selling. Your lawyer can also draft and review contracts, help you understand the purchase agreement, and be by your side at the closing to address any concerns or answer any questions you may have. An experienced commercial real estate attorney will be able to identify questionable contract terms and potential pitfalls.
Many real estate attorneys also have relationships with financial institutions and can help connect you with financing, tax abatement programs, and small business loans and grants. Their knowledge and counsel can make buying or selling a commercial property much less stressful, especially if you are unfamiliar with the process. When looking for a lawyer, you want to make sure you select a law firm with specific experience in commercial real estate transactions. In addition to having experience in commercial real estate, they should be well-versed in construction law, business law, banking and finance law, and tax law.
As informed investors we should understand the risks associated with real estate investing and that there is no guarantee. Please do your due diligence.
