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Common warning signs in a commercial real estate contract

| Feb 11, 2021 | Real Estate

Because location, location, location is everything when buying real estate, Texas business owners want to ensure that any commercial property they consider will be in an area that will help their company thrive. Finding this perfect space is not always easy, and even when property looks perfect, problems could arise that make you change your mind.

In some cases, the problems could be associated with the property itself, and in other cases, the seller could put you in a difficult spot by creating an unfavorable commercial real estate contract. Fortunately, you have the opportunity to review any contract before signing, and it is often wise to get more information and insight into any details you may feel uncertain about.

Contracts can have red flags

As a businessperson, you know how important the terms of any contract are. You likely also know that there are certain terms that could bring into question whether moving forward with the deal will benefit your company. The same situation applies to reviewing real estate contracts. Before agreeing to a purchase or even a lease, you may want to watch out for any major red flags, including:

  • Terms that would only benefit the seller/landlord and not you as the buyer/tenant
  • A seller who wants to verbally agree to the sale
  • For a lease, terms that do not clearly define tenant and landlord responsibilities
  • A document that contains multiple errors or is otherwise sloppy
  • A lack of terms giving you the opportunity to acquire adjoining space first
  • Clauses deeming it acceptable for the seller or landlord not to fulfill the contract under certain circumstances
  • A lack of demographic study results

When it comes to signing any type of contract, it is crucial to pay attention to the details. Even something that seems inconsequential at the time could come back to haunt you in the future. As a result, it is always wise to be thorough when reviewing the terms and remember that negotiating is a wise course of action.

Getting the most out of your contract

You do not have to sign any real estate contract that you do not feel comfortable with. However, if a piece of commercial property seems worth fighting for, you could take steps to negotiate a contract that you do feel comfortable with and that could help ensure the protection of you and your business venture.