The coronavirus outbreak has impacted life as we know it, and the real estate industry isn’t spared from its widespread effects.
As economies throughout the world implement gradual reopenings, there’s no better time than now for commercial real estate sellers to strategize in advance for the successful sale of a commercial property.
Staying ahead of the curve
In any real estate transaction, title documentation and the exchange of property due diligence is the most important – yet often overlooked – aspects of the deal. Problems arising from the prospective buyer’s due diligence review of a property are often the main causes of delay for many real estate closings.
To avoid these types of delays, now is a good time to anticipate potential problems and collate all necessary documents and information required by property buyers and closing agents.
If you’re planning to sell commercial real estate in Tampa, Florida here are several important items that sellers should obtain before listing a property for sale in order to ensure an efficient and stress-free transaction:
- Title insurance policy – Having the policy of title insurance on-hand can reduce the length of time required by a title examiner when identifying any title issues that may require attention.
- Survey – Updating your current survey of the property instead of requesting the buyer to obtain a new survey is a better option if you want to expedite the transaction’s turnaround time. Property sellers can pre-negotiate a price and a timetable with the existing surveyor in order to make the process more streamlined.
- Leases – Conducting a review on any leases on the property will shed light on whether there are any lease extensions, options to purchase, and rights of first refusal. In case any of these issues are identified, they can then be resolved during contract negotiations, and will confirm the security deposit amount and prorated rent on the closing statement.
- Pending litigation – Any existing documents related to pending litigation against the seller or the property should be obtained and reviewed by professionals before the property is placed on the market. This will help sellers make more informed decisions on how to deal with litigation in the property’s purchase contract.
- Site reports – Obtaining and reviewing site assessment reports and any studies related to the property’s environment (such as wildlife studies) will help sellers prepare for inquiries on the environmental aspects of the commercial property.
- Mortgage – Getting the lender’s contact information and inquiring whether there are any existing maintenance obligations, prepayment penalties, and other outstanding amounts that need to be paid is important in case the commercial property is subject to a mortgage. Collecting this information before listing the property can help a seller structure the purchase contract in a way that will place him or her in a more advantageous position.
- Organizational documents – The closing agent will review organizational documents, which serve as proof of the property seller’s organizational structure. In some cases, many sellers are caught off guard by the content of these documents as well as the requirements from the closing agent, such as the identity and allowed number of individuals who are required to consent to the sale or sign closing documents. This is common in business entities or trusts with a complex organizational structure.
- Personal property – Creating a written list of personal property such as furniture, equipment, and other items will help the buyer, the seller, and the closing agent determine exactly what will be transferred during closing.
Hiring a real estate lawyer
Hiring a real estate lawyer with plenty of experience in conducting commercial real estate closings will make the transaction more seamless. Before the property is listed, a lawyer can request a new title search and perform an in-depth review of all relevant documents in order to help place the seller in a favorable position during purchase contract negotiations.
A title search will need to be ordered at some point during the transaction, so completing this step during the early stages will reveal any existing liens or any unexpected issues against the property which the seller may not be aware of, such as wild deeds, easements, code enforcement liens, contractor liens, and any liens that favor districts or associations. Identifying all of this sooner rather than later will help the seller address and resolve them in the purchase contract, and will help expedite the closing process for the commercial property.
If you’re planning to sell commercial real estate in Tampa, get in touch with Viewpoint Realty by calling 727.584.7355, or send an email to viewpointrealtyinternational(at)gmail(dotted)com. You can also leave a message here.