These Four CRE Legal Issues May Trip You Up

Posted on: 7 January 2019

Dealing with any type of commercial real estate carries with it a range of legal implications. Buyers, sellers, leasers and renters all need to see that their rights will be protected, but these four common CRE legal issues can catch anyone off guard.

Getting a Clean Title

Both the buyer and the seller of a property have an interest in ensuring that a clean title is transferred as part of any sale. For the buyer, this is mostly about making sure they have confirmed use of the property. From the seller's end, there can be serious concerns about fraud charges if they are any doubts about whether something like an outstanding lien wasn't fully disclosed up front. Fortunately, an attorney with a background in real estate can help you run a full search and ensure that a clean title will be presented at the time of sale.

Corporate Constructs

The type of entity involved in an agreement can have many implications. Foremost, the way a company will be taxed tends to be defined by its structure. Secondly, a different structure may lead to different voting rules, potentially making the finalization process simpler or harder. Even folks who've been in the real estate game a long time won't necessarily have a fast answer to the question of what type of corporate structure is best. That's where a lawyer can step in and help you set up the right kind of entity for your commercial real estate deal.

Dealing with Insurance

Commercial real estate ownership implies a degree of risk exposure. How you insure against that risk can be a challenge to sort out, especially given that any claim filed against a commercial structure is likely to be treated with a higher degree of scrutiny than if someone happens to have a kitchen fire in their house.

Do you want to be fully self-insured? Can you afford to be? If not, what is the level of exposure you can accept? A real estate lawyer can help you establish a policy that matches your situation.

Financing Agreements

Funding a commercial real estate purchase can be a complex procedure. You might decide, for example, to go a non-traditional route and work with investors instead of a bank. Those folks will want guarantees in place in case something goes sideways. With the assistance of counsel, you can put together financing while protecting your own rights.

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