Buying or leasing commercial property is a significant investment. Without a proper risk assessment, that investment could lead to unexpected legal or financial issues.
Whether you’re a business owner or developer, understanding the risks involved can help you make informed choices about your investments. Here are some key points to keep in mind.
Title and zoning issues
Before closing a deal, it’s essential to review the title and zoning status of the property. A title search will confirm who owns the property and whether there are any liens, easements or ongoing disputes.
Zoning laws must also be checked to make sure the property can legally be used for your intended purpose. Missing these steps could result in delays and extra legal costs.
Hidden liabilities
Environmental hazards, code violations or unpermitted construction can expose buyers to liability. A proper inspection and review of public records can help uncover these issues. It’s also advisable to evaluate the building’s condition and history of repairs.
Reviewing leases and contracts
If the property has tenants, existing lease agreements should be reviewed. Certain lease terms and renewal options may affect your rights. Some service contracts or vendor agreements tied to the property may contain obligations you’ll inherit as the new owner.
A risk assessment helps you identify problems before they become your responsibility. It gives you advanced knowledge so you can renegotiate terms or even walk away from an unfavorable deal.
The more information you have, the better protected you are during a commercial property transaction. Before signing any agreements, it is also in your best interests to seek legal guidance.