Whether you are a business that is buying or selling property, you need to adequately draft a contract to ensure that all your transactions agreements are enforceable by law. However, successfully navigating the complexities associated with commercial real estate contracts requires skill and diligence. Thankfully, our team at M. Ross & Associates, LLC has put together a comprehensive guide for businesses to review commercial real estate contracts.
Tips for Reviewing Commercial Real Estate Purchase Agreements
It is vital that businesses do their due diligence before signing a real estate transaction agreement. Failing to do so could be a costly mistake for your business. Below we have put together some recommendations to help you review your commercial real estate contract.
- Always remember that a Letter of Intent is just that; it is not binding. The parties should enter a proper contractual agreement for the purchase and sale of any real estate.
- Review the vesting deed to confirm that the seller listed is the same as the one in the purchasing agreement and the title.
- If the buyer is purchasing the property through a lender, make sure that the terms for the purchase agreement allow it. If not, the parties should enter a new agreement with the proper entities.
- Check the purchase agreement to ensure that the entity name matches the entity documents.
- If you are the buyer, request copies of the seller’s entity documentation and certificate of incumbency to ensure the correct people are signing on behalf of the seller and that they have authorization for the transaction.
- Analyze the purchase agreement to determine if it lists property restrictions that may affect the property’s value or limit or prohibit its intended use.
- Keep an eye out for reversionary interests or buyback provisions, as it may allow the developer to regain the property if construction is not started or completed within a certain time frame.
- Look for existing and active leases in the purchasing agreement. A long-term lease on the property could affect your ability to use the property.
- Check that there is clear title.
- Conduct all required inspections, physical and environmental for the property.
Reviewing a real estate purchase agreement can be complex. There are several factors to consider and many that could go unnoticed and harm your business investment, if you don’t have the right eyes examining the document. . For such reasons, it is vital that you have an experienced commercial real estate attorney on your side to guide you through the process.
Contact our New Jersey commercial real estate attorneys today at (201) 897-4942!