Generally, a buyer will purchase commercial property in its “as-is”, “where-is” and “with all faults” condition. The two biggest protections the buyer has when purchasing a property is the representations and warranties of the seller set forth within the agreement of sale, and the ability of the buyer to perform an inspection of the property, known as due diligence. Consequently, it is important that a buyer understand the negotiation process so they are able to obtain the strongest possible representations from the seller and obtain the broadest ranging property inspection. One way of doing it through commercial or resident note buyers, who would purchase the contract between both parties, allowing the buyer to pay for the property. Companies like Amerinote Xchange offer information on how to go through this process for those who are interested in it.
This blog entry provides an outline of the type of due diligence a buyer should perform at a minimum prior to purchasing commercial property, or prior to purchasing property the buyer intends to use for commercial purposes. When purchasing a commercial property, at a minimum, the buyer should always (i) obtain and review the title report AND underlying exceptions; (ii) perform a Phase I Environmental Inspection; (iii) review any leases which are currently in effect; (iv) review the zoning jacket; and inspect the structure of the building.
There are many other types of due diligence a buyer can and/or should perform depending on the type of property they are purchasing; for instance a buyer can obtain a survey of the property. If you have any questions about the due diligence process, or wish to obtain more information on how our firm can help you navigate your purchase of commercial property, please give us a call at 215-790-0100.