Purchasers of commercial property need to perform more due diligence than residential buyers, because there is usually more money at risk. In addition to physical inspections of the major systems of the buildings and structures, a “phase-one environmental assessment report” is needed and provides an assessment of:
- Prior environmental issues that affected the property
- Historical use data
- Current issues that an inspector may find (buried underground storage tanks, hazardous chemicals, etc.)
If environmental risks are uncovered, then a phase-two environmental assessment report will be needed. This will require further site work, such as drilling in order to take core samples of the soil, air quality evaluation, etc.
A real estate appraisal will be required to determine the property’s value. Commercial appraisals differ from residential appraisals, since they involve different methods of estimating the property’s worth or potential. These include analyzing:
- Sales/Market approach: A review of the recent sales of similar properties or at least properties that can be adjusted to match the particulars of the subject property;
- Income capitalization approach: An analysis of Income versus expenses for the property (if there are tenants involved);
- The cost approach: What would it cost to build the structure(s) that exist? (for example, churches and other buildings with specific uses).
The attorneys at Leonick Law not only have vast experience in this field, but they also are owners of commercial and investment properties, giving them firsthand knowledge of all the issues that come with purchases, sales, financing and landlord-tenant relations.
From start to finish, we will represent you throughout the process.