Known for being intensely detail-focused, the world of real estate law can be daunting for the unequipped buyer. To begin to break down the intricacies and nuances of the field it is helpful to, first, identify the type of real estate you are buying or selling. There are two types of real estate transactions:
1. Residential real estate: buying/selling a home 2. Commercial real estate: buying/selling a building to occupy or lease to others
This is an important distinction because each type of real estate transaction carries with it a unique set of legal issues and risks. In this article we will look at why real estate lawyers are important for commercial real estate specifically.
Reason #1: Details have never been more important
Details are important in every real estate transaction. However, the importance of details is amplified in commercial transactions. Purchasing commercial property implicates a much more varied and potentially risky set of concerns and requirements than would be present in the buying or selling of a home.
For example, the search for commercial real estate can be grueling. Once a buyer is ready to move forward with a property, they will do so knowing that they will be forgoing other potential opportunities. Because the details of a property are of such importance to businesses, there will be an intense period of research and preparation that precedes the closing of a deal. This can take quite a long time, and eat up a considerable amount of money and resources.
At the end of this period, if the other party backs out or a deal-breaking detail is discovered, all of this time and money will have been wasted. That is why experienced real estate lawyers will help you to think through how to make a deal work, and how to protect you in case things don’t work out. If a deal fails to close because of the other party, your attorney can negotiate in advance to insure that you will be able to recover your losses. In this scenario, the other party will have to pay you what are called “damages.” An experienced commercial real estate attorney sweats the details so that your interest and your pocketbook are safe.
Reason #2: You need trained eyes on the property
Before a piece of commercial real estate is purchased, you and your real estate lawyer will spend significant time vetting the property to insure that every detail meets your needs and expectations. During this process, it is very important that the property be physically examined. This is something that not ‘just anybody’ can do.
It is critical that you have a trained set of eyes on-site to catch any problems that may not have been apparent in the title search or survey of the property. Your attorney will see to it that trained professionals conduct this examination because they can see things that you simply can’t.
Reason #3: You are not equipped to negotiate the contract alone
The process of negotiating a purchase price and all of the many details that are involved in closing a commercial real estate deal can be very complex. Who will bear the risk of delivering a title free from encroachments? What types of warranties can be obtained to protect against hidden environmental issues? What about structural problems that emerge after the closing? If anything happens to compromise this deal, or prevent it from closing, damages will need to be paid. But who pays who? How much is fair? This is where things can get complicated.
Make no mistake: the other party in this transaction will likely have a lawyer prepared to fight for them and their interests. If you want to have any chance at all of protecting yourself and your interests, you will want to hire a real estate attorney of your own.
Your real estate lawyer can negotiate the procedures for what happens if and when the deal falls through. Your real estate lawyer will also be able to hash out the values of the penalties (or damages) involved in your contract in order to protect your interests and minimize your risk.
Buying or selling commercial real estate in Nashville?
Rochford Law & Real Estate Title is a legal one-stop-shop that is equipped to help guide you through the legal procedures involved in commercial real estate deals and fight for your interests. For more information call (615) 269-7676 today or download our ebook below to learn more about commercial real estate closings.