Composed By Ygfasdfgdfgsd Mklooudfgsfd Pldfgsdfdffg – I read once commercial real estate that if you took all the property attorneys in Illinois and placed them end-to-end across the equator – it’d be advisable to leave them there. What do you guess that means?
I’ve written before regarding the requirement to use due diligence when purchasing commercial real-estate. The need to inquire, before Close, every critical feature of the property you are acquiring. The importance of valuing each industrial genuine estate transaction having a attitude that once the Closing occurs, there’s no going back. The vendor has your cash and is gone. If post-Close difficulties appear, Seller’s contract representations and guarantees will, at-best, mean expensive litigation. CAVEAT EMPTOR! “Let the buyer beware!”
The “problem” this causes, however, is that each and every attorney managing residential real estate transactions considers himself or the buyer a “real estate lawyer”, capable of handling any real estate transaction that will arise.
In business real estate, however, “later” might be too late.
Buying commercial real estate isn’t like buying a house. It’s not. It is not. It’s NOT.
In Illinois, and several other states, almost every residential real estate closure requires a lawyer for the buyer and also a lawyer for the seller. This really is probably intelligent. It really is great consumer protection.
We learned in law school that there are just two types of property: real estate and private property. Hence – we intuit – if we’re competent to deal with a residential real-estate close, we should be competent to manage a commercial real-estate closure. They are each “real estate”, right?
RESPONSE: Yes, they’re each realty. No, they aren’t the same.
The legal issues and risks in a commercial real estate transaction are unexpectedly not the same as the legal problems and hazards in a residential real estate transaction. Most are not even remotely similar. Attorneys focusing their practice managing residential real estate closures do not face the same dilemmas as attorneys concentrating their practice in industrial real-estate.
It is a question of experience.
A vital point to keep in mind is that the myriad consumer-protection laws that protect residential home-buyers have no application to – and provide no defense for – buyers of commercial property.
I acknowledge – the exercise of due-diligence is not inexpensive, but the failure to exercise due diligence can create a financial catastrophe for the commercial real estate investor.
If you are buying a property, hire an attorney who frequently represents home-buyers. If you are buying commercial property, hire an attorney who regularly represents commercial real-estate buyers.
Years back I stopped managing residential real estate transactions. As a dynamic commercial property attorney, even I hire residential property counsel for my own house purchases. I do that because residential real-estate practice is fundamentally not the same as commercial property.
Competent commercial real-estate practice demands focused and concentrated investigation of issues material to the transaction by a person who knows what they are looking for. In a nutshell, it necessitates the exercise of “due diligence”.
Perhaps I do “harp” about the requirement for qualified counsel warehouse for lease experienced in business real estate transactions. I genuinely believe it. I believe it’s crucial. I consider if you’re planning to purchase commercial real-estate, you must implement your critical thinking abilities and be smart.
POP QUIZ: Here’s is a simple test of YOUR critical thinking skills:
Please read the following Scenarios and reply the questions TRUE or FALSE:
Scenario No. 1: It’s Valentine’s. You happen to be in hot pursuit of the love of your life. Several weeks ago, she confided in you that all she actually dreamed of for Valentine’s Day was that her fan would appear at her doorway, dressed in a white tuxedo with tails and a top hat, and present her with a lovely bouquet of flowers. You have rented the tuxedo, but now you are concerned about how much money you’re spending.
TRUE OR FALSE: Since blossoms are virtually all the same, it is OK that you bypass the roses and display up having a bouquet of fresh yellow dandelions.
Scenario No. 3: Several years past, when you first got married, you asked a former classmate who’s a attorney to represent you in the purchase of your townhome. The cost was only $375. A year later, you started a family and decided you wanted a Will. The same attorney prepared Wills for you and your wife to get a total price of $700. You started your own company and your lawyer friend formed a corporation for you personally and charged you just $600-plus the cost of the company minute book.
Scenario No. 2: For several years you vision deteriorated to the point where you could barely see your alarm clock. You are now considering corrective eye surgery so that you will not want glasses. Your sister in law had corrective eye surgery and has had spectacular consequences. She recommends her eye surgeon, but says the cost is about $5,700 for both eyes and that the operation isn’t covered by insurance. A number of years ago, you had surgery to to fix your piles and it cost you just eight hundred bucks.
ACCURATE OR FALSE:
Your business has been successful and you have built a fairly considerable nest egg, but you are tired of working for every dime and want to try investing in property. You’ve got your eye on a strip shopping mall. It carries a supermarket, bank, hardware store, drycleaners (on a monthly tenancy), a few fast food restaurants, a gift shop, office, bowling-alley (using a lease going to expire), and wraps behind a gas-station/mini-mart in the corner. The price is $8,000,000, but the net working income looks fairly good. You figure if you turn the bowling alley into a full service restaurant/banquet facility, and change the drycleaners in to a 24-hour coin laundry, the net operating income will increase as well as the mall will become a magnificent investment. You plan to pull together much of your life-savings and put-down $2,000,000 to purchase this strip mall, borrowing the the total amount of $6,000,000. You recall that the lawyer friend managed the purchase of your property several years ago, so you know he handles real estate.
ACCURATE OR FALSE: Commercial real estate is exactly the same as residential property [Hey, its all soil, is not it (?)], therefore you are being a sharp businessman by selecting your lawyer friend who’ll charge much under a attorney who handles shopping center buys several time a year. [what’s warehouse space this “due diligence” items anyway?]
If you replied “TRUE” for any of the foregoing Scenarios