When it comes to commercial real estate, we mainly think about the houses and apartments brought by people for personal usage, but property planning is not restricted to residential properties. Commercial property planning and legal responsibilities are as complicated as residential real estate. In fact, the risk factor is higher for a commercial real estate property because lots of money is at stake for any commercial property. You may face several legal issues while acquiring a commercial property and here are some of them.
Legal Issues With Commercial Real Estate
Accurate property evaluation: When you buy a product from a shop, it is easy to compare similar types of products from various brands to decide the true value of the item you intend to buy. However, in the case of commercial properties, things are not that simple. Comparing the size, age, and place of various properties won’t give you a clear idea of the ideal price you should pay for the property you want to buy. For example, a small shop in a busy business zone of the city may cost thousands of dollars. On the other hand, a shop in a newly established mall on the outskirts of the city may cost even more. Now, while the place of the first shop is great today, the mall promises better income in coming 5 years and it offers better infrastructure. Take the help of a commercial property appraiser and lawyer to make sure that you are not spending anything extra for the commercial property.
Due diligence is essential: Just like you investigate about a house; its condition, loan availability, surrounding neighborhood etc. the same rule applies for commercial real estate. Make sure that the zoning of the property will allow your planned usage and title of the property will show any liens. Hiring an attorney for commercial estate law planning will help you avoid costly legal mistakes.
Liability assumption: Before buying a commercial real estate you must make sure that the property does not come with any law violations. For instance, the seller (also the previous owner) may have broken some environmental laws due to his unethical business operations. Now, if you are not aware of it, the legal authorities will compel you to clear the environmental hazards, even though the previous owner was responsible for it. Therefore, before signing the deed, let your property lawyer check the legal issues, if any so that you don’t get summoned to court in the future.
Financial risk evaluation: Purchasing a commercial real estate property is an intelligent investment only if you calculate your income properly. As you know, commercial properties are very costly and can hamper the financial state of your business. If you pay in cash, then it will cut the liquid cash reserve that could have been used for business operations. On the contrary, if you take a bank loan, then you have to calculate your income in the coming years because if you fail to pay the EMI for several months, the bank may seize the property. If you decide to rent the property, then you have to be aware of the tenant laws. In case, you decide to sell the property suddenly to solve any financial trouble, then be aware of the fact that getting the right buyer is a time-consuming process.
Commercial real estate transactions are very complicated and the (omit) issues are just some examples that you will face while buying a property. It is always ideal to take help of a proficient attorney to make sure the paperwork is properly. You can search the internet or ask your friends to recommend a commercial real estate attorney in your city. Meet him, discuss the legal issues of the property and follow his suggestions for a hassle free experience.
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