• Problems that Can Lead to Disputes in Commercial Property Transactions

    Problems that Can Lead to Disputes in Commercial Property Transactions

    Commercial properties are generally governed by a different set of laws than residential properties. There are inherent risks when buying or selling commercial property because of the complex financial arrangements, land restrictions, and market conditions that are unique to commercial property transactions. Being aware of potential problems ahead of time when negotiating a sale of commercial property can be helpful in avoiding costly legal disputes.


    Lender requirements. In a commercial property transaction, you are likely to require a loan from a lender or multiple lenders. The lender will request that you put up collateral for the loan in the form of a mortgage or deed of trust against the actual property. The lender therefore has the right to foreclose on the property if you violate the payment requirements. But lenders often have onerous requirements that can cause problems for the borrower. In some cases, lenders may limit the borrower’s ability to apply for additional loans, which could hinder the borrower’s ability to procced with the transaction.

    Land use limitations. A commercial buyer must ensure that the property is zoned for its intended use and that the business will not violate the zoning restrictions applicable to adjacent properties. It is important to ensure that your business can legally operate in the location where you intend to purchase the structure. Even when potential business owners properly investigate these laws, issues may arise down the road that result in a change in land use restrictions.

    Mechanic’s Liens. A contractor or builder can file a mechanic’s lien to encumber the property if payment for services rendered has not been made. Contractors are typically required to provide notice of the lien and are given a certain amount of time during which they can enforce the lien. A mechanic’s lien can be used to initiate foreclosure, so buyers need to be aware of any such lien on the property they intend to purchase. In a commercial property, it is possible for a lender to discover multiple liens on the property that resulted from construction over a period of time. It is also important to determine where the lien attaches. A court may decide that the landlord consented to construction work by the tenant and the lien can then attach to the landlord’s entire fee interest in the property.

    The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 or visit them at http://www.markweinsteinlaw.com to find out how they can advise you.

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