Commercial Real Estate

Real estate generally falls into two categories: residential and commercial. Commercial real estate refers to locations that are used for business purposes.

Common commercial property types include:

• Commercial space used by small business owners
• Malls and shopping centers
• Retail storefronts and warehouses
• Office buildings, rooms, or units
• Data centers, small factories, and industrial parks

The law plays into just about every aspect of the real estate market. Whether you’re trying to lease office space, auction off your building, or fill vacancies as a landlord, you should consult with a commercial real estate lawyer.

Buying and Selling Commercial Real Estate

If you’re looking to purchase a piece of commercial real estate, the purchase and sale process in commercial real estate will involve all sorts of details, such as:

• Disclosures regarding the conditions of a business property
• Inspections for structural damage, natural hazards, and total usable square feet
• Appraisals for determining value and return on investment on commercial ventures
• Working with banks, realtors, and escrow companies to close transactions

Working with the right lawyer with knowledge of commercial real estate in your area is essential. Commercial space in New York City is subject to completely different laws than, for instance, commercial properties in San Francisco. State laws can affect when, where, and how commercial real estate is bought and sold because government regulation affects the value of property and the ways in which people can use commercial property.

If you’re buying or selling commercial real estate, you need to think about the city, county, and state laws for the location of the property, such as:

• Laws for accessibility like counter-top heights, availability of restrooms, and common area measurements
• Required permits for certain business activities like alcohol licenses, sales permits, and tax certificates
• Registration with commercial utility services like police permits, fire department permits, and sewage and waste collection
• Compliance with building safety codes

Renting Commercial Real Estate

Just like multifamily apartment buildings, office buildings are rented all the time. The difference in the terms, however, can be very stark. Commercial leases usually involve:

• More expensive monthly costs, including taxes, insurance, and common area expenses
• Strict compliance with local ordinances, such as those that regulate noise levels and types of business activities allowed
• Less protection for renters, especially in the event of rent increases and evictions

While residential real estate law is far more tenant-friendly, commercial real estate law focuses more strictly on the terms of a lease alone and whether a party violated them. In other words: Because people don’t live and sleep in office spaces, courts don’t treat commercial real estate with the same sensitivity they may afford to residential renters.

Tenants who rent commercial real estate should be aware of:

• Security deposit laws (rules for safety/damage deposits and what may be deducted)
• Options to extend a lease or to renew for long-term
• Permitted uses of the commercial space (for example, restaurants may not operate in health care buildings, etc.)

Property management companies typically oversee many commercial complexes on behalf of landlords to help collect rent, keep the premises clean, and find tenants to fill vacancies. While property management companies are beholden to the landlord who hires them, they are still responsible to tenants because they act as agents of the landlord.

Legal Issues That Could Arise

Whether you’re buying, selling, renting, or leasing commercial real estate, you’re bound to encounter some legal challenges.

For example, buyers of commercial property might need legal advice regarding:

• The review of business purchase agreements and land sales
• Lawsuits against sellers who fail to disclose material facts about a property
• Communicating with lenders

Similarly, sellers or owners of business property could benefit from a lawyer’s advice regarding:

• Buyers who wrongfully back out of a purchase or fail to put up enough funds
• Real estate salespersons and brokers who fail to properly market commercial space for sale
• Foreclosure actions or other aggressive behavior from banks and lenders

The biggest area for legal trouble is between landlords and tenants. Even with a carefully-drafted contract, an owner and a renter can still find themselves at odds over rent, move-out dates, and who is responsible for maintenance. A skilled attorney can help ensure that a lease agreement is fair to both sides.

How Attorneys Can Help

A commercial real estate lawyer can help you navigate your way around a complicated commercial purchase or sale, a dispute with an aggressive lender, or a battle with an unruly landlord or tenant.

Even if you’re not having any problems with other parties in your commercial real estate transaction, the legal advice of a lawyer can mean the difference between getting sued and steering clear of legal pitfalls.

An experienced attorney can help you understand your legal rights regarding commercial property. They can help you draft protective contracts and make sure you are in compliance with governmental regulations before problems can occur.