Commercial Property Mortgage
Things You Should Know Before You Sign Your Commercial Property Mortgage Contract
Having a carefully drafted contract is key in your commercial real estate deal. You are required by law to have a written sales contract, and it is to your advantage to have one with each detail of the transaction documented.
Also, make sure to leave ample time for due diligence and closing, especially if any construction is involved!
Details
Despite the stories of real estate contracts being thicker than phone books, all you really need is a contract that lays out the important elements of your agreements. First, it needs to describe the property and the purchase price, as well as whether the price is due at closing or in installments.
Equipment, etc.
The contract should include any equipment, machinery, or personal property that is included in the purchase price. It should list any contingencies that must be met prior to completing the purchase. A common example of a contingency is whether you are able to obtain a commercial property mortgage to finance the purchase.
Don’t Forget…
The contract should cover how the property taxes and utility bills will be pro-rated between you and the seller, as well as what type of title insurance you must provide. The date for closing and delivery of possession should be in the document, as well as what legal recourse either the buyer or seller has in the event that the other party defaults on the agreement.
And Always…
Once the contract has been drafted, have a lawyer review it prior to signing it. A lawyer may be able to help you negotiate a better deal than what is originally presented.
Don’t be afraid to ask the lawyer to translate the contract into “English” if it is filled with legal jargon. Just by asking for an explanation, you may uncover an unsavory element in the contract that would have slipped by in the high-level terminology otherwise.
Unfortunately, not all property sellers are honest, and some will try to hide their true purpose in technical legalese within a contract. Having a trusted lawyer and commercial realtor review your contract will keep you safe in your transaction.
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