Commercial Real Estate

Those who are interested in purchasing a commercial real estate property may have a number of questions to ask before they make their investment. Some of these questions include, what is commercial real estate, what should be included in a commercial real estate contract, is it possible to change the zoning of the commercial property, what environmental factors should be considered when purchasing a commercial property and what type of insurance is necessary for a commercial property? This article will serve to provide generic answers to some of these very important questions.

In general a commercial real estate property is a property that can serve as a potential source of income for the property owner. This may include rental properties, office space, retail space, warehouses, hotels restaurants or even undeveloped land on which commercial properties can be built.

The contract for a commercial property does not vary significantly from the contract for a residential property. There are a number of elements that should be included in the contract for a commercial real estate property. These elements include an exact description of the property, the purchase price and the timeline for paying the purchase price in full to the current property owner, a list of personal property or equipment inclusions associated with the property, any applicable contingencies, a plan for prorating the property tax between the buyer and seller, dates for closing and for the purchaser to take possession of the property and legal recourse if one party defaults.

If you intend to use the commercial property for a purpose that is not permissible under the current zoning of the property there are some actions to take. One common way to handle this dilemma is to make the sale of the property contingent on the ability to change the zoning of the property. This protects you from purchasing a commercial property that is not usable for the intended purpose.

Considering environmental factors when you purchase a commercial property is very important. Learning of hazardous surroundings subsequent to the purchase of a commercial property can not only affect your potential income from the property but can also cause you to incur costly fees to rectify these problems. To avoid potential environmental problems, you should have a Phase I Environmental Report completed by a qualified individual and should also require the seller to provide you with a disclosure statement regarding hazardous materials.

The type of insurance you will need for your commercial property will depend largely on the intended purpose of the property. However property damage insurance and public liability insurance are recommended for all commercial properties. Property damage insurance will protect you from damage or loss of your building due to fire or natural causes while public liability insurance will protect you in the event that you are sued by someone who was injured on your property. Those who own rental properties should also consider rent interruption insurance. This will protect the property owner from loss of rent if they need to repair their building after it is damaged in a fire, flood, tornado or other natural event.