The fact that a vacant property has commercial zoning does not mean that all commercial uses are permitted. Local zoning restrictions and building codes will limit a proposed project’s size and the type of business use that can be developed on the property. Projects falling outside of those requirements will either be required to go through an often lengthy and costly approval process or be modified to conform to existing restrictions. Consequently, it is critical that either the permissible uses of and changes to a property be independently verified before the closing or the closing be dependent upon any necessary approvals.
A seller of commercial real estate should limit the representations required of it in the purchase agreement and must take care to avoid any representations that the buyer could later claim were false or misleading. Usually, this is done by specifying that the sale is being made on an “as is, where is” basis, subject only to the specific representations the seller has made in the purchase agreement (representations that have been carefully vetted and confirmed prior to the execution of the agreement). The buyer should make the purchase conditional upon satisfactory completion of its due diligence. If there are other conditions to closing, such as governmental approvals, the purchase agreement should carefully detail these matters, including any deadlines and what, if any, compensation is due to the seller if the deal is not completed.
For legal assistance with commercial real estate acquisitions, development, or sales, contact Silvestri Law, P.A., today.