Found an issue on this page? Let us know and we will look into it as soon as possible.
Industrial (commercial) real estate transaction: due diligence
Anonymous3 views5 answers
Good day. I am purchasing my first industrial (commercial) real estate property, cash, a small warehouse. I have been asked by the realtor representing the seller how long we need for due diligence before the actual closing. With little knowledge but confidently I responded 2 weeks should be comfortable, but that for now we are able to put down a good faith deposit contingent on our findings. I have a slight idea that among what would be needed is an ALTA survey, estoppel certificate regarding current tenants, verifying building permits, zoning,flooding,possibly a building inspection, (environmental?) Preparing a bill of sale, a sale and assignment of contracts document, a sale and assumption of leases document, and I am still researching on what I need.Does this timeframe seem reasonable?
Clifford M. MillerLitigation LawyerVero Beach, FLFL licensed ·
Perhaps. It seems a little hasty to me. But, ask a local lawyer that handles these matters. You ought to have a lawyer for a commercial purchase anyway. (Tax deductible also!)
Seems like a very ambitious timeline, particularly in Miami. If you don't have an attorney that specializes in commercial real estate, I think you need to identify and retain one asap.
Two weeks is too short of a time to fully grasp what you may have here. A Phase I environmental survey itself may take 1.5 weeks to complete, write a report, and review. I would say try and see if they would extend the due diligence period. It would depend on what type of commercial.industrial property you're looking at. These kinds of items take time to review properly and if you need professionals at the site, that tends to take time as well. If you need local surveyors and environmental consultants let me know, we have worked with some FL properties.
Having been involved in multiple buyer representations relative to commercial properties, I can conclusively tell you that 14 days is not ample time to perform the requisite due diligence. An environmental (Phase I) study can take several weeks depending on what issues arise. A typical due diligence period on a commercial purchase of this caliber would be a minimum of 30 days, but I would recommend 45 to 60, especially if there are zoning and/or permitting concerns. I strongly recommend seeking the advice of counsel to assist you in drafting the contract, as that will be your roadmap through closing and delineates the specific rights of each party. You can typically find a competent real property attorney to do this on a reasonable, flat fee basis that is tied to the purchase amount.
All these questions should be asked of your real estate attorney Representing you in this transaction. With such an important and complex purchase there is no reason an attorney should not be hired. The attorney will assist you through the due diligence and contact Derm etc. the fee is so small for peace of mind before and after closing. You don't want any liens or other matters to come up after you close that you will be responsible for unless an attorney assists you
