Commercial Real Estate in Middlesex County
Buying or selling commercial real estate is one of the largest decisions that a business can make. Even if you are familiar with residential real estate transactions, the added complexities and requirements of commercial transactions means you will need an experienced Middlesex County real estate attorney to adequately protect your financial investment. A lender will require much more from a borrower purchasing a piece of commercial property than they will from the average homeowner. From the Letter of Intent to the closing, commercial real estate in Middlesex County is a very different process compared to buying or selling a home.
Beginning a Middlesex County Commercial Real Estate Transaction
Commercial real estate deals often start with a non-binding Letter of Intent sent by the potential buyer to the seller which gives an overview of the material terms of the deal, i.e., price, down payment, loan amount, closing date, due diligence, etc. This allows the seller to weigh his or her options before committing to a binding deal with the buyer. Once the seller signals that he or she wants to move forward with the transaction, the attorneys will negotiate some of the more nuanced terms and draft the contract. This process is different than a residential transaction where the parties use a standard form real estate contract with an attorney review period that takes place after the contract is signed.
Most commercial real estate contracts allow the buyer some period of time known as a “due diligence” period which allows the buyer to inspect the property and review certain documents. Due diligence usually includes the following:
- Inspecting for structural issues
- Checking the history of the property, including environmental history
- Making sure the zoning matches whatever the future commercial use is
- Checking for environmental contamination
- Confirming that adequate utilities exist
- Confirming that the seller is up to date on taxes regarding the property
- Confirming whether there are tenants at the property and examining the leases, rent roll, security deposits, etc.
Financing Commercial Real Estate in Middlesex County
The finance process begins with an application submitted to a lender. This leads the lender to issue a financing/mortgage commitment which contains all the specific conditions that must be met before the loan will be issued. In most cases, the commitment checklist will be drawn up by an attorney at the behest of the lender. All items must be satisfied in order for the real estate process to move to closing. The buyer and his or her attorney will work with the lender and its attorneys in order to complete the checklist. Items usually required by the commitment include:
- Examination and confirmation of financial records
- Getting the receipt for environmental inspections
- Purchase of hazard insurance
- Execution of operating or partnerships agreements
This is by no means an exhaustive list. Your attorney will help you through the process. Once the checklist has been satisfied, the loan will be cleared to close.
Middlesex Commercial Real Estate Closing
If no financing was involved, then the closing can usually take place at the office of the buyer’s attorney, similar to a residential real estate closing. However, if financing was involved, then the closing may take place at the office of the lender’s attorney, mainly due to the number of documents the lender will need the buyer to sign. Once all documents are signed, the closing is completed. Note that this process will typically take longer than a residential closing and therefore the fees for a commercial transaction will likely be higher.
Need Help With Middlesex County Real Estate Closings?
At the Law Office of Craig Rothenberg, we understand the nuances of commercial real estate transactions in Middlesex County. Mr. Rothenberg is dedicated to making sure your rights and interests are protected and will guide you through the process. Contact us today to discuss your upcoming real estate transaction.