Commercial real estate transactions involve more than agreeing on a price and closing date. Reviewing the right documents before you move forward can reveal legal or financial issues that may affect your future plans or negatively affect your business years after your purchase.
Here are four important records to examine before completing the transaction.
Purchase agreement
This is the roadmap for the transaction, so it should clearly explain what both sides have agreed to. The purchase agreement outlines the price, important deadlines, contingencies, what is included in the sale and each party’s responsibilities. Understanding these terms early can help you avoid disputes over repairs, closing costs or other obligations later.
Title documents
Review these documents carefully because they can reveal legal issues before they become costly problems. Look for:
- Liens that could affect the property’s ownership
- Easements that may limit how you use the land
- Deed restrictions that could affect future renovations or expansion
- Other claims that could make it harder to sell the property
In Minnesota, a title examination usually takes place before closing, giving you an opportunity to identify concerns before the property changes hands. Depending on the issues you identify, you may be able to resolve them before closing, negotiate with the seller or decide whether to proceed with the transaction.
Survey and property records
These define the property’s legal boundaries and physical features that may not be obvious during a walkthrough. Property surveys and related records can identify:
- Boundary lines
- Shared driveways
- Encroachments
- Utility easements
If you plan to expand the building, add parking or install new features, you can use this information to spot limits before they become expensive surprises.
Existing leases and operating agreements
Existing agreements can affect your responsibilities from the day you take over the property. Leases explain each occupant’s rights and responsibilities. Operating agreements may cover shared parking, maintenance duties or common areas. Knowing these terms in advance can help you avoid unexpected obligations and protect existing business relationships.
Build your investment on a stronger foundation
Taking time to review these records now can help you avoid unexpected legal or financial issues that could have otherwise been resolved before finalizing the transaction.
If you have questions about any part of the transaction or are unsure what a document means, seek legal assistance early. An attorney can explain your options, point out potential risks and help you resolve concerns before you close the deal.