Commercial property is used to house businesses and can take many forms. For instance, multi-unit apartment buildings, office spaces, warehouses, hotels, and retail stores all are commercial property. Transactions often take place between companies or businesses rather than individuals. As a result, buying and selling commercial real estate can be a complex endeavor.
While all commercial real estate purchase agreements must contain some standard provisions, parties must tailor other provisions to meet their specific circumstances. A commercial real estate lawyer is invaluable in determining which provisions best meet your needs and avoiding critical mistakes that could jeopardize your rights. The real estate attorneys at Provident Law® can represent your interests throughout your real estate transaction. Call our office at (480) 388-3343 to schedule a time to talk with us today.
Failing to Identify the Parties
It may seem like a simple mistake, but you should ensure that your commercial real estate purchase agreement identifies the parties to the transaction. Suppose it is a business entity that is party to the agreement. In that case, the contract should specify the full name and an indication of the type of business entity (corporation, LLC, etc.) so that all parties are aware of the parties to the contract. When it comes to enforcing contracts and seeking damages, there may be vast differences between pursuing a business entity and an individual, so ensure that you adequately protect yourself by contracting with the correct parties.
Failing to Specify the Property at Issue
Purchase agreements should contain the property’s address and legal description. If boundary lines are unclear, the parties should have the property surveyed before the real estate closes. Likewise, if any easements exist, the parties should ensure they are contained within the legal description and/or purchase agreements.
Additionally, many commercial real estate sales include fixtures or items that are permanently affixed to the building, but not other personal property. You should specify in your purchase agreement which items are subject to the sale and which are not. Stating a date by which the current owner or tenant will remove any property not subject to sale is also preferable.
Negotiating Provisions but Leaving Them Out of Written Purchase Agreements
Parties often negotiate certain provisions but fail to include them in the written purchase agreements. At the time, they may think the omission is unimportant. However, when they want to enforce the provision that they thought everyone agreed upon during negotiations, and that provision is nowhere to be found in the contract, it becomes a problem. You must ensure that all details you discuss and agree upon, no matter how minor, are memorialized in purchase agreements. Otherwise, you will have difficulty arguing that a particular agreement is part of your contract if the other party doesn’t follow through.
Not Providing for a Firm Closing Date
In many real estate transactions, various steps must occur before closing. Inspections, zoning issues, title issues, and negotiations also must be resolved before the transaction can close. However, in some cases, one party may drag their feet and cause constant delays, so the transaction stretches out over months instead of weeks, with no end in sight. By providing for a firm closing date, or a date on which either party can exit the agreement if the transaction has not closed, a party is not stuck with an agreement that the other party can delay indefinitely. Certainly, the parties can agree to an extension of the closing date in writing. Still, at some point, one party should be able to walk away from the transaction without penalty if the other party does not follow the necessary steps to reach a closing.
Failing to List the Actions to Be Taken at Closing
Although you may assume that all parties will fulfill their commitments and take the necessary steps to transfer ownership and possession of the property when expected, things do not always go as planned. Your purchase agreements should specify the responsibilities that all parties must complete at the closing date or by a later date, if applicable. Including this information and any deadlines helps ensure that everyone does their part in completing the transaction as intended.
We Are Here to Assist You with Your Arizona Real Estate Matter
Our goal is to assist you in understanding your legal rights and responsibilities before entering a commercial real estate purchase agreement. We will advocate on your behalf throughout your commercial real estate transaction and ensure your rights are protected throughout every step of the process. Contact the offices of Provident Law® today at (480) 388-3343 or online and schedule an appointment to speak with an Arizona real estate attorney about your legal matter.