Purchasing or selling commercial real estate can be complicated. Having an experienced real estate lawyer in PA help you draft a purchase agreement can protect everyone’s interests and help avoid costly errors. Although each circumstance is different, there are a few vital elements that should be included in commercial real estate contracts to make the agreement clear and enforceable.
Purchase Price, Financing Terms, and Closing
In addition to specifying the price of the property, commercial real estate purchase contracts typically include how it will be paid for as well. SBA loans, commercial mortgages, private investors, and short-term bridge loans are common sources of financing in commercial real estate transactions.
The purchase agreement should include specifics about the type of financing being used to purchase the property, the name of the financial institution and/or investor providing financing, and the total amount. It must also outline closing costs, who is responsible for paying them, and the projected closing date.
A Detailed Description of the Property and Contents
A description of the building and any additional property included in the purchase should be detailed in the contract. Equipment, furniture, appliances, fixtures, inventory, and any other items to be included in the sale should be listed individually. An attorney for contract review will make sure all of these small details are covered, which can help you avoid many potential pitfalls and common mistakes.
Expected Condition of the Property
To ensure all parties are on the same page when it comes to the condition of the property, the purchase agreement must spell out the condition that can be expected. Although commercial properties are often sold as is, this needs to be explicitly stated in the contract.
Most real estate purchase agreements include an inspection contingency, which gives the buyer the right to have the property inspected in a certain amount of time. Depending on the industry, the contract may need to state which specific types of inspections must be conducted. The contract should also state the date by which the inspection should be completed and how long the buyer has to terminate the agreement post-inspection. Information about what will happen to a purchaser’s deposit if they opt to terminate the contract based on inspection results should be included as well.
Remedies in Event of a Breach
Seasoned real estate attorneys know that it is quite common for contract breaches to happen during the real estate transaction process. That is why they include remedies in the event that either party fails to abide by the contract. An indemnification clause outlines each party’s responsibilities if the contract is breached. For example, if the buyer backs out of the sale after a certain date, they may owe the seller a specified amount of money. This is meant to compensate the other party for the time and resources they invested in a deal that is no longer taking place.
These are just a few of the most important elements to include in a commercial real estate purchase agreement. Real property lawyers can address matters specific to your case and help your commercial real estate transaction run smoothly.
Do you need assistance with a commercial real estate transaction? Our business lawyers and real estate attorneys in West Chester, PA can help.