When looking to purchase a commercial property, it’s vital to discover early what risks are at play and to avoid surprises after closing. As such, it’s essential to conduct due diligence and to understand why it’s necessary and what to look for. After all, you don’t want to invest in a property only to realize problems and defects after closing, when it might be too late to mitigate them. Keep reading to learn more about this process and discover why you need the assistance of an Austin, Texas commercial purchases & sales lawyer.
What Does It Mean to Complete Due Diligence?
When someone purchases a commercial property, there should be a period in which the purchaser is allowed to enter the site and conduct an investigation of the property. It also allows them to get to know the seller, explore financing options, and review zoning laws and potential liabilities and violations.
Often some aspects of this process are conducted before signing a purchase contract, but typically most of the review is done once under contract, as you want to be sensitive to spending money without knowing that you can buy the property. The time period allowed for this process is subject to negotiation and in large part depends on the type of property. If you’re buying property that will need to be developed, naturally you need more time to be sure your development is feasible. But for properties that already are developed and operating, it’s not unusual to be limited to 45 or 60 days to complete your due diligence. However, depending on the needs of the seller and purchaser, the due diligence period may be longer or shorter.
What Must Be Checked?
There are a number of documents and other materials that the purchaser will usually request from the seller to allow a thorough due diligence process. This might include tax bills, surveys, site plans, architectural drawings, utility bills, leases, and any information about ongoing litigation, among other relevant information.
Similarly, you should inspect the property to ensure no structural issues are present. It is best to engage professionals in this process, as they should be able to more easily identify problems with the property. You’ll also want to conduct an environmental check, as this gives you a better chance to discover potential issues with contaminated water and soil or if mold or asbestos is present.
Why Do I Need an Attorney for This Process?
While those are some of the most basic aspects of the due diligence process, there are several more considerations you must make. This includes financing, access, zoning, title and other potential sources of problems. As you can see, there are many aspects to this process, and if you miss something while trying to juggle it all, it can cost you in the long run. As such, it is essential to enlist the help of an experienced attorney for this process.
Not only can someone familiar with the law ensure you are making the best purchase possible, but they can also provide additional assistance during the commercial real estate purchasing process, such as negotiating representations and warranties and other important provisions in the purchase contract and reviewing title and survey issues.
At PropLaw, our dedicated legal team understands how stressful it can be to purchase a commercial property, especially if you are unfamiliar with due diligence. That’s why you can count on us to provide quality legal advice. Our top priority is helping to make sure you understand what’s in your best interest. Contact us today to learn more about how we can assist you with due diligence and other critical aspects of commercial real estate.