Purchasing real property is a significant milestone for any business endeavor. While adding real estate to your business venture can increase your assets and expand your business, owning property can become a real hassle if not properly vetted. Before you purchase a commercial property, turn to a trusted advisor to review the transaction and participate in the closing to ensure you are not buying trouble. Palumbo Law conducts commercial real estate closings in Rhode Island, Connecticut, and Massachusetts and is well apprised of the applicable laws and requirements to ensure your acquisition goes smoothly.
Pre-Closing Transaction Review in Commercial Real Estate
Once you find the perfect business property, you must make sure the property has a marketable title. The marketable title means the seller has the ownership rights free and clear and is capable of transferring those rights to you. In some cases, a break in the chain of title may prevent a current owner from conveying a good title to you. In other cases, outstanding liens or restrictions on property use may impact your decision to purchase.
Title Search & Title Insurance
To make sure you are purchasing property with a marketable title, you should have an attorney perform a title search on the property. In conducting a title search, an attorney will review the chain of title and research all of the property transfers to make sure there are no outstanding claims to the property that might arise during your ownership. For example, should there be a break in the chain of title, someone who claims to be an owner of the property may attempt to assert his or her rights against the current owner. A title search attempts to discover any such claims and resolve them before you take possession of a property.
A title search is almost always required for the purchase of title insurance. Title insurance is an insurance policy that protects a buyer from any liens or other defects in the title. If there are any claims against the title of a property covered by title insurance, the insurer agrees to defend against those claims. Title insurance is critical, and no attorney would advise the purchase of a property without first obtaining a title insurance policy.
Restrictive Covenants & Zoning
Restrictive covenants are restrictions on the use of land. For example, a restrictive covenant may prevent the operation of certain types of business on a property, such as the sale of alcohol. When purchasing a commercial property, it is essential to consider whether any restrictive covenants exist that would prevent you from using the property for your intended purpose. A qualified attorney will alert you to any detrimental restrictive covenants that may impact your ability to use the property for your intended purpose.
Zoning laws are city or municipal laws that limit how a property may be used. Many cities impose zoning laws on a property to control the type of development occurring in the city. For instance, certain areas may be zoned residential only. Within residential zoning, there may be sub-zones for single-family and multi-family housing. Other zoning laws impact the occupancy of a property or the type of business that may operate on a property. When purchasing property to conduct business, consult with an experienced attorney to discover if zoning laws prohibit your intended use of the property.
Are Attorneys Required at a Commercial Real Estate Closing?
Some states, such as Massachusetts, require an attorney to conduct a real estate closing. In other states, an attorney is not required to be present but is often recommended. Many lenders require an attorney present at closing to ensure all prior liens are paid off at closing, and there are no issues that may impact their ability to enforce their lien against a property. While a lender may require an attorney to be present, states such as Rhode Island allow the buyer to choose the attorney he or she wants to have with him or her at closing.
Having an attorney at closing can help to facilitate all the moving parts involved in a commercial real estate transaction. An attorney can coordinate with lenders, title agencies, local governments, and real estate agents to ensure every required aspect of the transaction is properly completed. In addition to being present for the execution of documents, an attorney will also confirm all documents are properly recorded with the local registrar of deeds. This step is very important to the closing process as an improper recording is one of the most common defects to a real estate title.
Have a Rhode Island, Connecticut, or Massachusetts Attorney Conduct Your Commercial Real Estate Closing
Expanding a business by adding commercial real estate is an exciting step in the growth of a company. In the midst of all the chaos involved in a commercial real estate transaction, it can be easy to overlook some of the basic principles of purchasing a property. Having a trusted attorney on your side can help to avoid any headaches that could otherwise result. At Palumbo Law, our attorneys have closed hundreds of commercial real estate transactions and always have your best interests in mind. Contact our Rhode Island, Connecticut, or Massachusetts offices today to discuss your real estate closing.