Buying commercial real estate is a significant investment, and having a well-written contract is key to protecting your interests. Knowing what to include in the contract can help you avoid problems down the road. There are some important elements to ensure your contracts contain when buying new commercial real estate.
Purchase price and payment terms
Make sure the contract clearly states the purchase price of the property and the payment terms. This should include details about any deposits, financing arrangements, and deadlines for payments. Understanding the financial obligations and making sure everything is written in the contract will help prevent misunderstandings.
Property description and boundaries
The contract should contain a clear description of the property, including its boundaries and any structures included in the sale. This ensures you know exactly what you are buying. Including a legal description and a survey of the property can also help confirm the boundaries and avoid future disputes.
Due diligence period
A due diligence period gives you time to inspect the property and gather information before finalizing the purchase. The contract should specify the length of this period and any rights you have to back out if you find issues. Make sure you have enough time for inspections, title searches, and any other checks you want to complete.
Contingencies
Contingencies protect you if certain conditions are not met. Common contingencies include securing financing, satisfactory property inspections, and resolving title issues. Make sure the contract includes contingencies that allow you to back out or renegotiate if something does not go as planned.
Seller disclosures
The contract should require the seller to provide disclosures about the property. This includes any known defects, environmental issues, or legal problems. Disclosures help you understand the condition of the property and can prevent unpleasant surprises after the purchase is complete.
Closing details
Ensure that the contract includes all details related to the closing process. This should cover the closing date, who is responsible for closing costs, and the transfer of ownership. Having these details in writing helps both parties prepare for a smooth closing.
When buying commercial real estate, a detailed contract is crucial to protect your investment. Including key elements can help ensure a successful transaction and minimize risks.