COMMERCIAL REAL ESTATE
A real estate purchase may be part of an overall sale of a business. There may be several separate agreements that are negotiated between the parties regarding the purchase and sale of the business.
Negotiation of the terms of the purchase agreement must be fully understood by all parties to the transaction. The contract should be written in short, plain and understandable sentences to avoid ambiguity. Ambiguity can lead to unnecessary and expensive litigation. If all sides understand their rights and responsibilities under a contract, litigation can be avoided.
Be aware of title restrictions, potential environmental problems, and items that will be disclosed by a survey of the property. The parties should do a due diligence investigation on the parcel that is being sold and/or purchased. That will make the transaction smoother.
Closing on the property. Reviewing all loan documents (if any) reviewing the title commitment to the property, obtaining and cooperating with the municipal authorities relative to building permits, business licenses, zoning restrictions etc.
A full understanding of the lease terms and obligations that the lease places on both the tenants and the landlord is needed by all parties. Lease terms should be written in short, plain and understandable sentences to avoid ambiguity. Net leases are utilized by landlords to obtain contributions to expenses of operation of the commercial property. Rental Payments including costs for real estate taxes, maintenance of common areas, insurance, utilities and other landlord expenses.
Retail Leases may have a provision for percentage rent (particularly in leases for retail businesses). These percentages are often based on the number of sales made by the lease. The length of a lease term and any options to renew should be negotiated between the parties. How long is the initial base lease term? Both parties want to make certain that it provides a sufficient amount of time to allow the business to succeed. However, the length of the initial lease term or any extension should provide all parties needed flexibility. Options to renew or extend a lease term are often negotiated between the parties in this regard. A lessee’s ability to sublet should be fully understood by both parties.
Negotiation for alterations and maintenance by the parties should be explicitly set forth in the lease (Ex. Landlord contributions toward build-out/removal of trade fixtures attached to premises at the expiration of lease term). Potential lease terms may also include months at the beginning of the lease at either no rent or a substantially lower rent. This is a subject of negotiations between the parties.
Landlords require commercial tenants to maintain liability, property and casualty insurance, and plate glass insurance, etc.. The policies generally name a landlord as an additional insured. The lease should be explicit as to what is required. All parties must have a full understanding relative to maintenance of the premises. The responsibilities of the landlord and the tenant must be set forth in clear and understandable terms to avoid unnecessary conflict.
RESIDENTIAL REAL ESTATE
Remember you are not just selling a house or piece of real estate you are selling a HOME. This is the place that you have lived and enjoyed and perhaps watched your family grow up in.
You want professionals on your side on all aspects of the transaction and that can work seamlessly together. (In alphabetical order)
PRIOR TO OFFER:
Choose a realtor that you feel comfortable with, will work to get you the best price possible and be active in showing the house to prospective buyers and potential buyers’ brokers/realtors. I can recommend brokers who are familiar with the area and have sold homes in that area and will work hard for you. Upon receipt of an offer, the parties negotiate over price. Some key issues aside from purchase price include the closing date; home condition requirements; seller concessions on closing costs, etc.
UPON ACCEPTANCE OF OFFER:
Realtor provides a contract to the attorney and this begins a typically 5 business day review during which the attorney reviews the contract and makes suggested modifications to the contract. During this time, it is important to ask the attorney any questions you may have about the contract provisions.
During this same 5 business day period, many buyers schedule a home inspection completed by a licensed home inspector. This process is to look for aspects of minor components to the house which may lead to immediate major expenses. These items may include the roof, furnace, etc. Note that the provision does not relate to major components of the home or merely cosmetic issues. The attorney then communicates (in writing) with the buyer’s attorney to work out matters raised as to contractual issues and inspection items to reach a finalized agreement between the buyer(s) and seller(s).
Typically upon acceptance, a buyer posts an agreed upon amount of earnest money, a down payment, in an amount agreed upon by the parties. Often an initial check is provided upon initial acceptance. Other times a check or a supplemental check may be provided upon completion of the attorney review/inspection period.
PERIOD BETWEEN ACCEPTANCE AND CLOSING:
The Seller’s attorney chooses a title company and a title search is completed to make certain that a clean title is being provided to the buyer. If there are any clouds in the title, the Seller’s attorney works with the title company to attempt to resolve those title issues or get the title company to ensure those issues. This is needed to allow the closing to go forward.
The attorney orders a survey for non-condominium properties. For condominium properties, various condominium documents are to be provided to the buyer. The Attorney (in conjunction with the realtor) obtains those documents from the condominium management. If there any municipal water bills, water or zoning certifications or municipal transfer stamps needed, the attorney does the necessary legwork to obtain these. YOU WILL NEED TO OBTAIN PAYOFF LETTERS FROM ANY LENDERS (1ST OR 2ND MORTGAGES ETC OR OTHER LIENHOLDERS). THESE SHOULD BE GOOD THROUGH THE CLOSING DATE.
Upon receipt of a mortgage approval, the Buyer obtains a “Clear to Close” from the mortgage company and the closing date is set. A time and place are set typically at the title company that is providing the title insurance for the transaction. The attorney drafts closing documents such as the deed to transfer title, a closing statement for the financial aspects, a bill of sale, etc.
On the day before or the day of closing, a walkthrough is conducted to make certain that the house is in the same condition, that requested/agreed to repairs have been completed/that the systems and appliances are in working order.
Sometimes when the Seller does not want or cannot attend a closing a Power of Attorney for Property is drafted that gives the attorney or someone else the power to act in the Seller’s stead and sign the needed documents. I like having the Seller available by telephone if possible.
You also obtain numerous documents at the closing including a deed for the property (you keep a copy) and the original is recorded with the county recorder of deeds, a bill of sale for personal property such as appliances, etc.
The attorney is present with you at the closing and goes over and explains these documents and the rights and responsibilities that the documents place upon you.
The attorney also deals with any last minute issues that may come up either in terms of the walkthrough and make certain that the financial aspects are correct and understood by the client.
I have been handling real estate matters for buyers for over 30 years and charge a reasonable flat fee. This is an important and possibly stressful time for buyers and sellers. Always feel free to reach out to me with questions or concerns. I will try to alleviate any stress and provide answers to your questions or concerns. I take pride in providing the best possible service to my clients.