In this article, we’ll be covering why having a commercial real estate attorney is important when buying or selling commercial real estate property. If you’re selling or buying a residential property and looking for more information, we discussed the risks of not using a real estate attorney when buying a home in a previous article that’s worth a look.
We’ll answer the questions “why is an attorney necessary for commercial real estate transactions,” “do I need an attorney for the entire process or just one portion,” and “what does the attorney do if I’m the buyer or seller?”
Why is an attorney necessary for commercial real estate transactions?
Buying or selling a commercial property can be a much more complex endeavor than the sale or purchase of a home. There are a number of issues that can arise during the process of buying, selling, financing and developing commercial property and trying to navigate the process alone, or even with the help of a commercial real estate agent can be ulcer-inducing. Commercial real estate purchases also have many more laws and regulations than buying a home, all of which must be followed in order for the transaction to be valid. Your attorney will review all the pertinent information and documents and consult with you regarding financing, construction, zoning and environment laws, title insurance, taxes, and any other questions or issues associated with land use and development.
A qualified attorney should help you with negotiating the sale, analyzing any contracts, resolving inspection or permit issues, and finalizing the closing. He or she will also be much better at catching any abnormalities in the contract that could cost you time and money in the long run. Beyond the purchase of the property, the attorney can help address any issues with contractors or subcontractors during the build-out process. For example, if your architect hijacks your build-out and holds up the entire process by withholding the blueprints or refusing to work with the contractor, then your attorney can seek legal action against that person much faster and with greater efficiency since they’re already familiar with the property.
Other items that might come up before, during or after the property purchase that can be handled by your qualified commercial attorney include:
- Negotiating Tax Incremental Financing (TIF);
- Dealing with tax abatement arrangements (LERTA);
- Negotiating and drafting purchase and sale contracts;
- Evaluating and resolving ground leasing issues;
- Problems with property management contracts and site development issues;
- Title insurance matters
Am I Required To Have An Attorney Present At Closing?
While some states do not require you to have an attorney present at closing, or at all throughout the process, it is highly advised that your attorney is at the closing. In fact, it’s not uncommon for the seller to invoke power of attorney and let their attorney handle all the paperwork and signing at the closing. While all or a large portion of the documents are available for review prior to the closing it’s important to have one final review during the closing before signing any legally binding contracts.
What is the Attorney’s Role for the Buyer?
While the attorney’s primary job for a buyer or seller is to be a guide and experienced during the entire transaction process, he or she may have to take on different responsibilities depending on the situation. If a buyer is purchasing a property with tenants, an industrial complex, or a property that is bank owned, different legal stipulations will be present from the outside. Or, in a more unique circumstance like buying a property that has structural problems, is in a natural disaster zone, contains or may be exposed to hazardous materials, or is being sold by the government, the attorney will need to bring his or her focused experience to manage risk, identify opportunities and to ensure the deal proceeds smoothly.
What is the Attorney’s Role for the Seller?
A commercial real estate attorney can help make your property marketable even if it has undesirable traits. If your property has liens against it or leases associated with it the attorney can navigate the complex legal process of resolving those before or at the time of sale. Or, if the property must be sold due to an unfortunate circumstance such as death or divorce and the emotional toll is too great, you can hand over a majority of the responsibility to the qualified attorney.
Whatever the property and whatever the reason, whether you’re a buyer or seller, having a qualified commercial real estate attorney to guide you through the process will save you time, money, stress and also protect you from any potential future legal issues, such as a lawsuit.
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