Pop Quiz Commercial Real Estate Investing
We read once that if you took all real estate legal professionals in The state of illinois and laid them end to get rid of along the collar – it will be a good idea to leave them there. That’s what My spouse and i read. What do you suppose that means? californialegacytowing.net
My spouse and i have written before about the need to exercise due diligence when purchasing commercial real estate. The need to investigate, before Closing, every significant aspect of the property you are acquiring. The importance of evaluating each commercial real estate transaction with a mindset that once the Closing occurs, there is no going again. The Seller has your money and is eliminated. If post-Closing problems come up, Seller’s contract representations and warranties will, at best, mean expensive litigation. STIPULATION EMPTOR! “Let the buyer beware! ”
Paying extra attention at the start of ad advertisement real estate transaction to “get it right” can help you tens of thousands of us dollars when the offer moves bad. It’s like the old Fram(R) oil filtration system slogan during the 70’s: “You can pay me personally now – or pay me later”. In commercial real estate, however, “later” may be too overdue.
Buying commercial real house is NOT like buying a home. It is not. Not necessarily. It is NOT.
In Illinois, and many more states, nearly every residential real property closing needs a legal professional for the buyer and a legal professional for the seller. This might be smart. It is good consumer protection.
The “problem” this causes, however, is that every legal professional handling residential real property transactions considers himself or herself a “real property lawyer”, capable of managing any real estate purchase which may arise.
All of us learned in law college that there are only two sorts of property: real estate and personal property. Therefore – we intuit – if we are competent to take care of a residential real property closing, we must be competent to handle a commercial real estate shutting. They are each “real estate”, right?
ANSWER: Certainly, they are each real estate. No, they are different.
The legal issues and risks in a commercial real estate deal are remarkably unlike the legal issues and dangers in a residential real estate transaction. Most are not really remotely similar. Attorneys concentrating their practice handling residential real property closings do not face the same issues as attorneys concentrating their practice in commercial real property.
It is a few of experience. You either understand the issues and hazards inherent in commercial real estate transactions – and discover how to deal with them – or you may.
A key point to keep in mind is that the myriad consumer protection laws that protect residential home buyers have no application to – and provide no security for – buyers of commercial real estate.
Qualified commercial real estate practice requires focused and centered investigation of all issues material to the purchase by someone who is aware what they are looking for. In short, it requires the exercise of “due diligence”.
I confess – the exercise of due diligence is not cheap, but the failing to exercise due persistence can create a financial disaster for the commercial real estate investor. Avoid be “penny wise and pound foolish”.