Many aspects of commercial property acquisition are similar to a residential real estate transaction. Hopeful buyers look at listings to determine what properties might meet their needs. They schedule showings and work with real estate agents.
They also frequently hire lawyers who assist them with drafting custom documents and reviewing critical paperwork. An attorney can help people avoid common legal pitfalls that can cost them money or delay the closing. Frequently, an attorney may help buyers put together an offer that is reasonable but protective.
They may need to include contingencies in case the transaction proves unfavorable. There are many contingencies commonly used in real estate transactions that may apply to both residential and commercial properties. However, there is one unique type of contingency required in commercial real estate transactions that is rarely necessary when buying a residential property.
Buyers may need protection from zoning issues
Not all commercial properties are fit for every type of business use. There are a variety of different commercial zoning designations, and potential buyers must ensure that the zoning for the property aligns with the intended use of the property after its acquisition.
In some cases, commercial property buyers may need to secure a zoning variance or request a change of zoning from local authorities. The process of changing the zoning for a specific property or securing a variance can take months to complete. There is also never a guarantee of success.
Buyers may need to make a contingent offer and then begin the process of working with municipal authorities to address their zoning concerns. If they cannot secure the change of zoning or a variance, then they can potentially cancel the transaction.
Particularly in scenarios where the characteristics of a neighborhood have shifted significantly in recent years, the plans for the property may not necessarily align with the current zoning for the property. The right contingencies take some of the risk out of making an offer to purchase real property.
Business leaders and those intending to invest in commercial property may need assistance reviewing listings for suitability and making offers that don’t leave them unnecessarily exposed. Partnering with a commercial real estate lawyer can help business leaders and investors protect their capital during what can be a lengthy and costly process.