What is Commercial Real Estate Purchase Contract Drafting?
A commercial real estate purchase contract is a legal contract transferring ownership of a commercial property from a seller to a buyer. It has to contain essential clauses to clarify the arrangement for both parties.
Read the rest of this article for information about key terms to include in a commercial real estate purchase contract, how to draft it, and how a lawyer will help you navigate the drafting process.
What are Key Terms in a Commercial Real Estate Purchase Contract?
A commercial real estate purchase contract contains the following essential information:
- Property. Describe the property so that it’s clear exactly what real estate is being transferred.
- Purchase price. State the total sale price of the property and what deposit is included.
- Due diligence. The buyer should have a clear timeframe for conducting a physical inspection of the property.
- Financing. State if the buyer has to secure a commercial loan or mortgage for the deal to go through.
- Closing terms. Specify how the deal is closed, what transfer duties apply, and any costs involved in the process.
What are Tips for Drafting a Commercial Real Estate Purchase Contract?
A legally valid commercial real estate purchase contract must be put in writing and signed by both parties. Here are some things to consider when drafting it.
Explain all Financial Terms
Specify the property price and how it will be paid. Since financing can be required, this should also be outlined so that there’s no ambiguity over the transaction. Provide details, such as the financial institution that will provide financing and the amount supplied.
Describe the Property in Detail
When providing a description of the property, make sure to include contents included in the purchase, such as equipment, fixtures, inventory, and appliances. This will prevent potential disputes over what’s included.
Include the Property Condition
Specify the condition of the property so that both parties are on the same page. Note that many commercial properties are sold “as is.” If this applies to your specific arrangement, make sure you state it clearly in the agreement.
Provide Inspection Terms
The buyer should have the right to inspect the property. State what type of inspection will occur and how long the buyer has to terminate the contract after conducting an inspection.
Mention Remedies
If there is a breach of the contract, you should protect yourself by adding clear remedies in the agreement. For example, if it happens that the buyer withdraws from the sale, the seller might want to protect their interests by stating that a certain amount of money is required for the buyer to pay them.
Define Representations and Warranties
By providing representations and warranties, the agreement provides transparency and allocates risk. Some assurances might include that the seller owns the property and has the right to sell it, and the buyer has the authority to enter the agreement.
Should a Lawyer Draft Your Commercial Real Estate Purchase Agreement?
Asking a lawyer to draft your commercial real estate purchase agreement is advisable, especially if you’re unsure of what to include in it or you don’t have contract drafting experience.
A lawyer can assist you in various ways during the agreement drafting process, such as by:
- Clearly defining the transaction, such as by identifying the property and purchase price.
- Conducting due diligence by identifying any issues that could occur, such as regarding the property title, leases, and existing encumbrances.
- Drafting conditions precedent. They’ll establish conditions that must be met prior to the transaction going through.
- Allocating risk between parties. They’ll address warranties, representations, indemnities, and other potential risks.
- Setting payment and closing terms. They’ll explain the deposit, payment dates, and closing costs.
- Including remedies. They’ll consider appropriate remedies to include in the agreement if either party doesn’t fulfill their responsibilities.
- Ensuring legal compliance. A lawyer will use their legal knowledge to customize your agreement to all relevant laws and regulatory requirements.
- Reviewing a commercial real estate purchase agreement you’ve drafted. This will give you peace of mind that all its terms are clear, specific, and fair to both parties.
Where to Find a Lawyer for Commercial Real Estate Purchase Agreement Drafting
If you’ve decided to hire a lawyer to draft a commercial real estate purchase agreement, you don’t have to take lots of time to find one in your area who’s reputable and experienced. Using an online legal platform can help you by giving you easy access to a range of lawyers who have contract drafting and review experience.
ContractsCounsel is one of the largest online legal marketplaces that connects clients to a curated network of lawyers who have been vetted on the platform.
It’s easy to ask a lawyer on the platform to draft your commercial real estate purchase agreement. Here are the steps to follow.
- Go to the ContractsCounsel marketplace.
- Select ‘One-time project’ and ‘Create or update contract.’ Alternatively, you can select ‘Contract review.’
- Post your project. Specify a few details of your project or what you need so you’ll connect with the most suitable lawyers.
- Wait for bids. Instead of you having to search for lawyers, lawyers directly on the platform will send you multiple bids.
- Review the platform’s lawyer information. There’s lots of information you can review about the lawyers, such as their location, expertise, years of experience, credentials, and client ratings for previously completed projects on the platform.
- Select a lawyer who meets your requirements. Hire them to draft your commercial real estate purchase agreement for a flat fee.