What are some potential pitfalls in a commercial real estate business deal?

When buying, selling, renting, or leasing a piece of commercial real estate, there are various risks involved. Your goal should be to minimize these as much as possible. Examples of potential problems that can lead to legal disputes include the following: defects in title, zoning and land use restrictions, overlooked lease notice and default language, ambiguous operating expense definitions, market fluctuations, and environmental contamination.

  • The key to mitigating these risks is by taking time to do the following:
    • Quantify all user/investor needs and purposes.
    • Evaluate the market risk.
    • Confirm the building/space is a fit given your objectives or use.
    • Distinguish Investment potential, and overall physical (e.g. deferred maintenance), environmental, and regulatory risk.