When investing in commercial real estate, it's important to make sure that all of the details in writing are correct. You must look carefully at the partnership agreement or operating agreement with your commercial real estate attorney.
Reading the Executive Summary Is Not Enough
The documents come with an executive summary. However, you will also need to understand the underlying documents. You will want to make sure that there is a good buy/sell agreement. This allows each party to receive a good deal when being bought out. For example, you might want to give each partner the option to purchase shares at the offering price.
Using the Right Forms
A common mistake when drafting a contract is to simply go to an office supply store to purchase generic contracts. After you do this, you might discover that the contracts you purchased do not fit with the type of agreement that you are forming. It's better to consult with a commercial real estate attorney over the type of contracts you need. The strength of the contract will ultimately determine the strength of your real estate investment deal.
Examining the Inspection Reports
Whether or not you will be able to obtain a loan will depend on inspection reports. An attorney will help you determine whether a lender is likely to accept the inspection reports. In some cases, a lender might reject a report and demand that only an approved vendor be used to perform an inspection. You will always want to obtain pre-approval from the lender.
It is important to know all of the existing issues with the property. Fortunately, it is the job of the seller to inform you of these issues. If you later discover issues with the property that you were not warned about, you may need to take legal action.
Make sure that the documents have all of the legally required disclosures as well. For example, the seller of a commercial real estate property must disclose when there is lead or asbestos on the property since these are potential health risks.
Working With the Right Legal Team
You will be able to avoid many legal mistakes by hiring the right commercial real estate attorneys. You will need an attorney who understands the risks associated with investing in real estate and can help you avoid these risks. An attorney can also help you increase your profits as you review investment opportunities. Contact a commercial real estate attorney to learn more.
