Commercial Real Estate
Commercial transactions are negotiated documents rather than filled in forms, and the risk sits in provisions that residential deals never have to address.
A commercial acquisition involves parties who are usually entities, financing with its own requirements, a due diligence period that has to be used properly, and a property whose value depends on income, tenants, environmental condition and permitted use. None of that is covered by a standard residential form, and the amounts involved make the difference material.
The firm represents buyers, sellers, owners and investors in commercial acquisitions and dispositions, leasing, and disputes arising out of both. Work is scoped to the transaction, and the same candour applies as everywhere else on this site: where a deal is straightforward enough that the cost of counsel exceeds the risk being managed, you will hear that.
Acquisition and disposition
The purchase agreement in a commercial deal does real work. It defines the investigation period, states what the seller is representing about the property, allocates what happens if those statements turn out to be wrong, and sets the conditions under which the buyer may walk away with its deposit.
- Letters of intent, and whether any part of them is intended to bind
- Purchase and sale agreements, with due diligence and financing periods that are actually workable
- Representations and warranties, and whether they survive closing and for how long
- Review of existing leases, rent rolls, estoppel certificates and subordination agreements
- Environmental due diligence and assessment, and how discovered conditions are handled
- Survey and title review, including easements, restrictions and access
- Zoning and permitted use confirmation, and any nonconforming use questions
- Entity formation and structuring for the acquiring party
- Assignment of contracts, warranties, service agreements and permits at closing
- Closing coordination with lenders, title companies and opposing counsel
Once it expires without objection, the deposit is normally at risk and the ability to renegotiate on discovered conditions is largely gone. Deals go wrong when that window is treated as a formality and allowed to run out while reports are still outstanding.
Holding and operating
Once acquired, commercial property generates its own legal work: leasing and lease enforcement, disputes with contractors and vendors, construction liens recorded against the property, zoning and land use questions when a use changes, and eventually disposition or transfer within a family or partnership.
How a transaction runs
- Structure before documentsWho is acquiring, in what entity, with what financing, and what the exit is expected to look like. Structure decided late is expensive to change.
- Agreement negotiatedDiligence period, deposit conditions, representations, and the circumstances in which the buyer can walk. This is where the risk is allocated.
- Diligence run on scheduleTitle, survey, environmental, leases and zoning, tracked against the deadline rather than against optimism about when reports will arrive.
- ClosingCoordination with lender, title company and counsel, with the assignments and consents that have to be in place before funds move.
Questions about commercial property
Can I use a residential purchase form for a small commercial building?
It is a poor fit. Residential forms do not contemplate a due diligence period, tenant estoppels, environmental condition, entity signatories or representations that survive closing. Small commercial deals still carry commercial risks, and the form simply has no language for them.
Is a letter of intent binding?
It depends entirely on how it is written. Most are intended as non binding on the business terms while binding on a few points such as exclusivity and confidentiality. Poorly drafted ones create real ambiguity, and parties have found themselves bound to terms they thought were preliminary.
Do I need an environmental assessment?
For most commercial acquisitions it is prudent, and where there is any industrial or automotive history it is essential. Lenders frequently require it. Discovering a condition after closing is a materially worse position than discovering it during diligence.
The property has tenants. What do I need to review?
Every lease and amendment, the rent roll, deposits held, and estoppel certificates confirming what each tenant believes their terms to be. You are buying the income stream, and the leases are the income stream.
Diligence periods do not extend themselves.
[PHONE]Matters with a closing date, a filing deadline or a hearing already on the calendar are handled by phone.