It’s been awhile since I have posted. For all who have been looking for this next article, I apologize for its lateness. Between purchasing and rehabbing the building, advertising for tenants and my other businesses, I kept pushing off my posts thinking “I’ll get to it tomorrow!” Well, after a couple of months of saying that I finally realized that I had to write this post since it wasn’t going to write itself.

Commercial Contract of Sale
At least in New Jersey, it’s the wild west. Realtors do not have a standard contract used consistently throughout the state. In my case, I was purchasing the property from a bank that had foreclosed and given the property to an asset management company to handle. The contract was EXTREMELY one sided. It gave them the ability to cancel it at any time, to charge us a fee per day if closing was delayed, and basically forced us to purchase the property with little to no disclosure on their part and little due diligence time allowed on my part.

Although I’ve negotiated numerous contracts, I had never dealt with a commercial one, so I had an experienced attorney review it and help me put in the appropriate wording for what I wanted in the contract. Not only did we get this done after several difficult rounds of negotiation with the seller, but the attorney actually found something that I had missed with regard to buyer paid settlement costs. Within the contract the seller had changed a normally “seller paid” expense into a “buyer paid” expense. Due to the amount of changes I was making to the contract, some of the potentially pressing environmental issues that I was tackling and the difficulty I was having dealing with the sellers– I missed that one line in the contract! By changing this part of the contract back to a “seller paid” expense, the attorney saved me about $3500. Well worth the cost of having the attorney review the document.

Especially when purchasing a commercial property, make sure you have the right to have a full inspection, including structural, HVAC, electrical, plumbing, environmental, etc. You want the right to be able to back out of the contract and have all deposit monies returned should any of the inspection be unacceptable.

The lessons here are to make sure that you have the contract reviewed by a competent legal professional and know what you need to get out of the contract to feel confident that the deal isn’t going to be too risky. Then inspect the property to make sure you are not getting a “white elephant” that could cause you major problems down the line.

In a future article, I plan on covering some of the more important governmental issues of which you need to be aware of when purchasing commerical and even residential properties.

Best regards,
Steven Boorstein
Author and Landlord