Legal inquiries

The legal side of due diligence is most often done by an attorney and aided by a reputable title/escrow company. These folks look at things such as the following:

  • Defects on the title and survey
  • Any potential environmental problems
  • Proper and improper special uses and encroachments that affect the property

These are all potential deal killers.

Be sure to have tenant leases thoroughly reviewed and audited. After all, when you buy a commercial property, you’re essentially buying the leases and the property comes for free. Contracts imposed on the property, such as employment contracts, service contracts, and warranties, all need to be scoured over with a fine-toothed comb.

All attorneys are not created equal. Attorneys specialize in areas of law. Please don’t have a family law attorney represent you when purchasing a large shopping center. That’s like having a foot doctor give you an eye examination. Instead, hire a real estate attorney. The real estate attorney that you hire doesn’t have to be local, but needs to be familiar with laws in the state in which the property is located.