Commercial Real Estate Laws


Commercial Real estate is the term given to office buildings, retail properties, shopping malls, warehouses, hotels as well as undeveloped land that can be utilized for these kinds of buildings. Except for single-family homes, almost all types of real estate can be classified as commercial real estate.

Commercial Real Estate Agreement

All kinds of real estate contracts have to be in writing. An oral agreement accompanied by a handshake will not be recognized by the court. The Statute of Fraud law applies here and it states that all real estate sale agreements should be in writing. It is not important that the commercial real estate agreement has to be fancy in order to be applicable. If the pricing and the description of the property is there, the contract will be enforceable in a court.

Contents of a Commercial Real Estate Contract

Each and every real estate deal is unique therefore it is important for a buyer or a seller to take relevant advice from a real estate lawyer on how you can defend your interests in the best possible way within the contract. You should at least try to put some very important issues

for example, a precise description of the property that you intend to buy together with the land around the building, a list of any sort of personal property or equipment that comes with your purchase, any contingencies that have to be fulfilled before you are obliged to make the purchase, how the taxes and the bills of the property will be allocated between the seller and yourself, what type of title evidence the seller must provide and finally the date for closing and the release of possession.

Option Fee

This regards to the payment of money an interested buyer pays to the property owner in return of assurance that the particular property will not be sold at a given period of time. Option fee is especially a utility alternative for the buyers as it provides ample time to browse the other options in the market.

For example the buyer might see a particular property but may not be convinced enough to purchase it right away before he could investigate the cash flow and evaluate it with the other available properties around the locale. The only preference the buyer is left with is the option fee where the seller promises not to sell the property till a certain point of time and at a stated price. However, if the buyer decides not to purchase after the payment of the option fee then the owner holds the right of forfeiting the money.


This is the option included within the real estate contract that works as an escape hatch especially to the buyers. Contingency allows the offeree of the contract to walk away from it without any penalty on the condition that some of terms have not been met that was included within the contract.

Contingencies are obligatory to abide for a number of conditions such as when the buyer has not been granted with a mortgage loan of at least 75% during the time period of purchase, if the buyer is not satisfied with the condition of the property but has already purchased it relying on the contractor's report, if the property or building has not been renovated as desired or certain environmental hazards that most likely to occur even though the property has been well examined before the purchase.

Apart from these contingent factors there could other several causes which could lead the buyer without any penalty for the negligence of the contract laws. Interested property buyers can hire professional lawyers to advice them on the appropriate contingencies that could be included within the contract of the deal.

Concern Relating Environmental Problems in Purchasing Commercial Real Estate

You should be concerned about any type of environmental problem that your purchased real-estate might cause to the surrounding. For example, if your purchased property or its surrounding land has suffered contaminations from hazardous or radioactive substances, you might have to face very costly clean-up imposed by the state and federal laws.

You are required to obtain at least a Phase one Environmental Report which can help you to estimate the environmental risks. However, it is not a wise idea to ask your seller to prepare a disclosure statement of any known or potential hazards.