When investing in commercial real estate, conducting thorough due diligence is the key to making an informed buying decision. The more you know not only about the physical property itself, but also about its income history, any associated risks and liabilities, environmental concerns, and the legal documents associated with the parcel and any improvements, the better able you will be to make a strategic decision about whether to move forward – and if so, on what terms.
The attorneys in our real estate practice group have extensive experience representing buyers in commercial real estate transactions in Florida. In addition to handling contract negotiations, closings, and land use matters, we also routinely advise and represent clients in all aspects of the pre-purchase due diligence process. From requesting and reviewing documents from the seller to reviewing environmental reports and physically examining the property on the ground, we critically assess all potential issues with our client’s particular goals in mind.
Key Aspects of Commercial Due Diligence
When purchasing a commercial property, much of the information you need to review and analyze will be in the hands of the seller. From existing leases and inspection reports to construction warranties and notices from governmental authorities, a significant portion of the commercial due diligence process involves obtaining (with appropriate representations) and reviewing documents from the current owner.
Reviewing title is a key early step in the due diligence process as well. From confirming the seller’s ownership of the property to identifying and reviewing any exceptions and all necessary insurance endorsements, examining the property’s title records can prevent unexpected (and costly) issues down the road.
When purchasing a commercial property, a survey can identify issues such as land use violations, set back violations, and third-party encroachment that are not evident from the title documents.
Zoning and Land Use
For commercial properties, confirming necessary zoning and land use authorizations is crucial to ensuring that subject property will be suitable for your intended use. A comprehensive due diligence analysis will examine any pending zoning changes and other potential future impacts as well.
From Phase I and II hazardous material inspections to environmental regulations for the protection of wildlife, commercial real estate acquisitions can raise a host of environmental compliance matters. Our significant experience in local real estate transactions will help our clients address potential issues prior to closing.
The physical inspection is a fundamental aspect of any pre-purchase real estate due diligence investigation. We work closely with licensed inspectors, engineers, and other experts to help our clients identify any repairs and liability risks that should be addressed prior to acquisition.
Terms of Purchase
Is the seller providing adequate warranties regarding regulatory and environmental compliance? Will you have the right to seek indemnification for third-party claims arising out of conditions predating your acquisition of the property? Is there a clear path to closing with conditions that are within your control? These are just a few of the numerous questions to be addressed when negotiating the terms of purchase for a commercial property.
Speak with a Commercial Real Estate Attorney at Woods, Weidenmiller, Michetti & Rudnick, PLLC
Our firm represents investors, developers, business owners and other parties in commercial real estate acquisitions throughout southwest Florida. For more information about our services, please call 239-325-4070 or inquire online today.