Whether you are just starting your business or expanding an existing one, purchasing commercial property can play a major part in furnishing premises or serving as an investment. Buying the right property can deliver solid returns.
Negotiating and finalizing the contract can include several pitfalls that may cause problems if you are not careful. In particular, several key areas deserve your close attention throughout the process.
Not researching use restrictions
The last thing you want is to buy a property, then discover the existence of laws or zoning regulations that prevent you from using it the way you intended to. Discussing this matter with the seller is not enough. Sellers may misrepresent the facts or simply be unaware of or misunderstand the situation.
For example, a business that has existed for a long time in the same spot may be able to continue its regular operations under a grandfather clause even if zoning changes. As a new buyer, you may not be able to reap the same benefit. Therefore, it is important to assume nothing and do some thorough research.
Relying on oral communication
During contract negotiations, there may be a lot of communications going back and forth: adjustments to terms, requests for information, and so forth. Putting everything in writing and having both parties sign is a good way to memorialize everything and avoid misunderstandings and disputes later on.
Overlooking proper land description
A key component of a real estate sale contract is a complete description of the property. Simply putting down the address does not suffice. In addition, it is important to confirm the description in the contract does not contradict other land records such as the information in the county assessor’s office. Otherwise, you can saddle yourself with a property vulnerable to dispute. By the same token, make sure to inquire about easements or other restrictions that may apply and hamper your use of the property.
Failing to confirm the authority to sell
When buying property from a company, you should make sure the person you deal with is an authorized representative who has the power to conduct negotiations and sign the contract on behalf of the company. If this is not the case, the contract may be invalid.