September 27, 2017

Acquiring real estate is a lot like dating, and then getting married. You get the opportunity to check the place out and see if you like it, then you seal the deal. But, just like getting married, many investors tend to find out about some skeletons in the closet that can turn out to make your life difficult.

We’ve all heard stories about some of these ghosts and goblins hiding in the most unsuspecting places. For instance, one investor acquaintance of mine picked up a lot that was prime for development in the perfect location of a town, but the only problem was there was an old fuel tank buried underground on the back of the property. The cost to evaluate the environmental impact, and then remove the tank made the investment look pretty terrible, actually.

Mistakes to Avoid When Inking Commercial Real Estate Deals

5 Mistakes to Avoid When Inking Commercial Real Estate Deals | Denver Business Attorney

5 Mistakes to Avoid When Inking Commercial Real Estate Deals | Denver Business Attorney

In this blog, we’ll look at five of the most common mistakes made when making a real estate deal:

  • Environmental Clause – Inexperienced real estate developers tend to care only about the asking price and location of a parcel, and sometimes unfortunately leave environmental impact considerations off the table. If you don’t include an environmental impact clause in the contract, then you’ll have to settle for any unforeseen pitfalls. By not negotiating environmental terms and conditions, you might be waiving your right to any unforeseen consequences. By establishing environmental terms and conditions, you may be able to avoid any responsibility or liability for any unforeseen dangers hidden in a structure or buried beneath the ground. The seller and the buyer should both take an active role in getting an environmental assessment on the property done, and assign known and unknown environmental liabilities. Taking a proactive approach to environmental terms and conditions, will help the buyer from taking over another party’s miserable debacle.
  • No Environmental Assessment – Not getting a Phase I Environmental Site Assessment would obviously be another rookie mistake. A properly conducted Phase I ESA will help uncover any land uses of the property from the very beginning of recorded history to present. The Phase I ESA will also unveil any past environmental disasters or investigations on the property.
  • Failing to Retain a Reputable Environmental Consultant – Hiring a competent and professional environmental consultant is imperative in terms of doing environmental quality due diligence. Be sure you check out the reviews and qualifications of the consultant. Spending the right amount of money up front will ensure that you don’t have any unforeseen environmental liabilities later on. You can always hire a cheap consultant, but you get what you pay for.
  • Short-Changing Yourself on Due Diligence – If you rush the environmental due diligence portion of the buying process, then you might miss something in the process and make some hastily made decisions that will come back to bite you in the end. This will include everything from hiring a qualified consultant, conducting a Phase I ESA, pulling permits, getting city and/or county building approval, assessing any environmental liability, and a Phase II EAS for high-risk land use. On average, due diligence will take anywhere from 60 to 90 days. If the seller demands a quicker due diligence period, then that should raise a red flag and you might have to walk away, because the consequences may be more expensive than you imagined.
  • Poorly Arranged Framework for Post-Closing Obligations – The post-closing obligations should be handled properly before the closing date. Oversimplifying responsibilities and guarantees can very easily lead to unexpected fees, costs, and delays. Special attention should be paid to access, fees and costs, confidentiality, scheduling clean up, filing Record of Site Condition, indemnities, releases, and contingencies.

Contact a Denver Business Attorney at Downey & Associates, PC

Real estate transactions and property disputes involve risks, which is why you need Denver Business Attorney Thomas E. Downey, who is trusted, knowledgeable, and experienced. Since 1983, Thomas Downey and the legal team at Downey & Associates, PC, have been providing attentive and knowledgeable legal counsel on how to handle your real estate matters.

Working with our team, located in Englewood, you’ll save money, time, and worry. Our aggressive professional advocacy team handles the following types of services: business and commercial disputes, antitrust litigation, real estate matters, personal injury (both plaintiff and defense), product liability, property tax, employment law, and OSHA/MSHA conflicts.

To schedule a free, no-obligation consultation, call (303) 813-1111 or by emailing us using the contact form on this page.

 

Categories: Buy-Sell Agreements, Contract Disputes, Contracts, Development Plans and Building Permits, OSHA Violations