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Due diligence and buying commercial property

| Sep 29, 2017 | Commercial Real Estate |

For commercial real estate investors in California who are considering properties to buy, due diligence is an important part of the process. It allows prospective buyers to make sure that that the property in question will be a wise investment for them.

Buyers should have enough time to properly evaluate the structural integrity of a property and to determine if it is compliant with local environmental and zoning laws. It is also necessary to research the title history and review the books and records of the seller. Knowing before purchasing the property what types of liabilities will be assumed and if there is an issue with the cash flow related to the property are issues that have to be addressed before a sale is completed.

When prospective buyers have completed their due diligence and the outcome is not to their liking, it can serve as a basis for a price adjustment. If the seller is not willing to negotiate, the deal can be called off. However, the buyer may want to consider if the addition of warranties or other assurances may be enough to make the deal go through. If the seller is insistent on the price, the buyer may accept the price, but only with the warranties and representations in place and a favorable survival period.

Commercial real estate investors may use a real estate attorney to assist with the transactions related to the purchase of commercial property. The attorney may guide clients away from legal missteps if the terms of the purchase agreement appear to be problematic.