If you have found the perfect property to build or expand your business, you are entering an exciting time of your businesses development. This process is complex and too often we see situations where steps are overlooked and it causes legal tie-ups or unexpected costs.
To protect your commercial investment and your business, it is best to reach out to a commercial real estate lawyer who knows how to complete a due diligence on your property. Here are some of the factors and questions to prepare for before you buy.
Prevent buyer's remorse
Avoid regret and buyer’s remorse by doing your due diligence before making your purchase to help minimize risk to your business and ensure your building is a sound investment. Due diligence is the steps you or an experienced commercial real estate lawyer takes to protect your investment, from simply taking extra time before you purchase to going over your finance plan before you invest.
Engage due diligence
- Building Condition Assessment: a staple of purchasing any property that includes going over the physical condition of the property.
- Building History: This should be researched with all liens and obligations examined.
- Building Ownership: Includes knowing if there are commercial tenants. The security of any income stream that depends on tenants must be carefully evaluated to avoid an unoccupied building.
- Old Building Insurance Policies: These are key to knowing the claims that have been filed, which will show the defects or potential liabilities with your purchase.
- Take 30 Days: It is best to take the time, wait for a final agreement document, and go over it with your real estate lawyer since they will know what documents need to be obtained based on your province.
Assign tasks to your acquisition team
When you receive all of the documents you need, you should not analyze these on your own. Acquire a team to help you build a list of questions, concerns, or inquiries that help you strategize your next business purchase. Here’s a small checklist of what to consider or ask:
- Are survey markers found where they’re supposed to be?
- Is there a satisfactory maintenance contract on the boiler?
- What kind of guarantee was issued on the roof repairs?
Get each item within your personalized checklist to various other staff, including your lawyer, and follow-up with them to ensure your property is protected.
Plan your financing purchase
One of the most important considerations before you begin anything is to look at your business plan. It can look as though your projections should dictate the ability to afford commercial real estate, but there is still a need to go over these figures further and with added expertise, like an accountant.
With assistance you can prepare a brief synopsis of your financing needs, financial planning, and assets for presentation to a lender assessing interest rates, repayment options, and personal guarantees. It is advisable to include your lawyer to be involved with any final agreements with a lender since you will be responsible to check that you meet all lender conditions, both disclosed and hidden, before signing an offer of purchase.
Ownership of commercial real estate is an exciting time for a growing business, but it can carry many risks when taking the leap too quickly and without any professional guidance. If you begin with these steps, you are already reducing that risk and beginning to profit from multiple revenue streams, while most importantly growing your business. If you’re buying commercial property in Niagara, Chown Cairns has a handful of experienced commercial real estate lawyers who can assist in protecting your commercial investment.