hire attorney for commercial real estate acquisition

Why Hiring an Attorney for a Commercial Real Estate Acquisition is a Smart Investment

Hiring an attorney for commercial real estate is not a requirement. However, due to the complexity and nature of real estate transactions, it is strongly advised. Unlike residential real estate, commercial real estate transactions involve complex contracts, multiple parties, and a significant amount of time and money. Today on the blog, we will look at three particularly important reasons why you should hire a commercial real estate attorney when purchasing commercial property.

1. Purchase and Sale Agreement Review

After the buyer and seller have entered into the letter of intent, a commercial real estate attorney will review the purchase and sale agreement to make sure it is fair and protects your interests. The letter of intent provides the framework for the purchase and sale agreement, but it leaves many concepts open for negotiation.

For example, purchase and sale agreements usually provide a 30-day window for due diligence. However, this is never enough time to obtain a survey and have it reviewed. Therefore, it is important to separate the period for obtaining and reviewing a survey from the period for obtaining and reviewing the due diligence materials. Doing so will ensure that you can still terminate the purchase and sale agreement after the expiration of the due diligence period if the survey discloses any material survey defects.

2. Due Diligence

Due diligence is the period when the buyer has the right to conduct its own investigations into the property. This period begins on the effective date of the purchase and sale agreement and usually expires 30 days later. During this period, your commercial real estate attorney will review different documents and point out any red flags so you can decide whether to move toward closing or terminate the transaction. The attorneys at Kearney, McWilliams & Davis PLLC will provide you with a lease summary, title summary, survey review, review any documents sent over by the seller, and review zoning regulations and environmental reports.

Lease Summary: A lease summary is for any property that is tenant-occupied. The lease summary provides a high-level analysis of the commercial lease. It will note any issues in the lease, which party is responsible for the payment of maintenance, taxes, and insurance, and will break down any complex language in the lease.

Title Summary: The title summary will provide a high-level analysis of the title exception documents received from the title company. This high-level analysis will flag any potential issues if you are buying vacant land intending to build, potential use restrictions, and any assessments you will be responsible for.

Survey Review: The survey review will look at the entirety of the survey to make sure every square inch is copacetic and within the prescribed building areas, easement areas, etc. It is important to have the survey certified to the correct parties and that the surveyor plotted all the title exceptions on the survey.

3. Closing

Leading up to closing, your attorney will prepare all closing documents, coordinate with the title company and oversee the transfer of funds.

A commercial real estate attorney can be one of the best investments you make when purchasing commercial real estate as they will help you with a smooth and successful transaction. The attorneys at Kearney, McWilliams & Davis PLLC have extensive experience in the purchase and sale of commercial properties and would love to guide you through this daunting process. Reach out today to book a consultation with an associate!

*Please note that the above information is not a suitable replacement for the competent legal advice that an attorney will provide.

Written by Craig Galanter, Senior Attorney at KMD Law