8 Terms of Purchase Agreements You Need to Know Before Buying a Commercial Property

Buying a commercial property that's right for your business can be one of the most difficult and crucial transactions you'll need to complete as an entrepreneur.

That's why negotiating a smart purchase agreement that takes into account all your interests - the needs of your employees and the growth and profitability of your business - is not only important, but important.

A good commercial real estate lawyer can, of course, guide you through the key questions. You will also put the odds on your side by familiarizing yourself with certain key terms that can derail the transaction if they are not well understood or used.

Here are eight terms for commercial property buyers for the purchase agreement that one will need to pay close attention to.

1. Assessment of the condition of the building

Inspection of the condition of a property and review of required repairs, usually performed during the due diligence process, prior to the conclusion of the purchase. This assessment typically involves structure, roof, windows, walls, mechanical and electrical systems, and plumbing.

2. Due diligence

Examination required by a buyer of a commercial property before the conclusion of the transaction in the due diligence process is usually described in the purchaser's bid. It may include an assessment of the condition of the building , an environmental site assessment , a title search, a survey, and a review of the owner's major expenses for the property (including the costs of repairing the property structure) and other documents (such as utility bills, property taxes, and maintenance bills).

3. Servitude

The right to use part of a neighbours' property, or right of access to part of that property is such a right that may be based on a verbal or written agreement. Easements are usually discovered during the due diligence process prior to the purchase of the property.

4. Encroachment

Structure that encroaches on a neighbouring property without permission may be bushes that overflow onto a neighbouring property, an overhanging roof or a septic tank that extends underground beyond the boundaries of the property. Encroachments are usually discovered during the due diligence process, prior to the purchase of the property.

5. Charge

Unresolved claim against an immovable, such as a mortgage or tax debt is a great problematic factor.

6. Environmental Site Assessment

Inspection to detect environmental problems, usually performed during the due diligence process. This assessment generally focuses on factors such as site contamination, the presence of hazardous building materials, indoor air quality, and any necessary remediation work.

7. Surveying

Description of the legal address and dimensions of the property, the location of the structures and their dimensions, as well as the servitudes and encroachments present, if any. Although surveying is sometimes done as part of the due diligence process, many buyers prefer to replace it, because of its high cost, with title insurance to protect against any problem with title.

8. Title search

It refers to the examination of documents relating to a property for the purpose of detecting any problem that may affect its value. It could be a dispute over ownership of the building or issues related to easements or charges. The title search is usually conducted as part of the due diligence process.

Becoming an investor and looking for commercial property for sale is a great idea to prepare for retirement and pass on wealth. One may Google just by typing "commercial real estate" or may contact a broker for this. But whatever you do you need to check all the relevant documents very carefully need to be extra cautious while dealing with properties.

Published by Kate Westall