Sale of Commercial Property
Commercial real property includes malls, retail stores, office buildings, and industrial property. It is any land or building that is meant to generate a profit. The profit may be gained from rent or capital gain. Usually, a commercial real property transaction is more complicated and involves more money than does a residential property transaction. Sellers of commercial property must be alert to many different legal issues that may arise. If you are exploring a sale of commercial property, you should consult Queens real estate lawyer Shane D. Scott.Sale of Commercial Property
The procedure of selling commercial property is not the same as that of selling residential property. A commercial real estate sale begins when you, as a seller, sign an agreement with a broker and retain a real estate attorney. Once a potential buyer makes an offer, you will need to decide whether or not to accept. If you accept, your attorney will need to prepare a commercial real estate contract that incorporates riders, a survey, and an existing lease. The contract may be complex, involving a mortgage contingency clause, zoning regulations, Phase I and Phase II Environmental Site Assessments, violation removal, and lease and tenancy considerations.
The language of the mortgage contingency clause may differ between contracts, but generally it allows the buyer to cancel the contract if the buyer is not able to qualify for a mortgage as specified in the contract. These clauses do not only benefit the buyer; as a seller, you are also benefitted because you can tailor the clause to restrict the amount of time in which your commercial property is off the market.Down Payment
Depending on the type of commercial real estate loan that has been obtained, the down payment on real estate is either 10% of the contract price or 20-30%. Once your attorney receives the down payment from the buyer, it should be deposited into your escrow account. You will need to sign the contract, and two copies of the fully executed contract will need to be sent to the buyer’s attorney.Steps Prior to Closing
You will need to take several steps before the closing occurs. If there is a mortgage contingency clause, the mortgage proceeds will need to be monitored. If an Environmental Site Assessment issue is identified, it will need to be handled. It may be necessary to make repairs or cure any violations as required by the contract. If there are any title defects found, they will need to be resolved. The contract should specify whether tenants need to be removed from the premises. If the contract does require it, you will need to take legal steps to remove the tenants.
Before the closing, you will need to arrange payoff from the buyer’s lender as appropriate. You will need to arrange final meter readings for utilities. You also will need to schedule a final walk-through for the buyer. Various closing documents will need to be prepared. In the five boroughs of New York City, these can include an Automated City Register Information System (ACRIS) Form, Deed, and Power of Attorney. The ACRIS system is supposed to give notice to property owners of any deeds or mortgages that were recorded against a property; the database includes only recorded documents dating to 1966 and does not replace a title search. In New York, a deed needs to include a description of the property and identifying information for both the seller and the buyer, but only the seller needs to sign it.Closing
As the seller, you will usually be responsible for notifying all the parties required to attend the closing of its date, time, and place. The seller’s attorney prepares certain closing documents, such as the transfer of title, deed, and transfer tax returns. He also provides the buyer with instructions about paying the balance of the purchase price and any adjustments. At the closing, your attorney and you will need to sign closing documents and mortgage documents and adjust taxes and fees that apply. The mortgage will need to be paid, along with your title bill. You will receive the final payment and deliver keys and possession of the premises. After the closing, your commercial property is officially transferred to the buyer.Retain a Real Estate Lawyer in Queens
Sellers may face complex legal considerations in a sale of commercial property in Queens or the surrounding areas. The Law Office of Shane D. Scott can help you navigate the process. Call us at (800) 230-0744 or complete our online form.