5 Common Problems When Closing a Commercial Real Estate Transaction

The Most Common Closing Problems In a Commercial Real Estate Transaction & How To Handle Them

Commercial real estate transactions are very different from residential real estate, but both types of transactions require many measures before an offer can be placed and final paperwork can be signed. You’ll need to complete a property inspection and an appraisal, gain attorney approval, resolve zoning issues, and take many other steps before you finally get the keys in hand.

Closing a commercial real estate transaction in Arizona

Although many commercial real estate transactions happen smoothly, mishaps can occur in any deal. An experienced Gilbert franchise lawyer can help you handle any problems quickly, whether you decide to finalize the sale or back out. Here are five of the most common problems that can happen during a real estate transaction:

1. Inspection Results Indicate a Significant Issue with the Property

Your Chandler commercial real estate attorney will strongly recommend an inspection of the property to help ensure that the building is safe, secure, and in good condition. An inspection prevents unpleasant surprises and is generally considered to be an essential part of any real estate transaction. For you as the buyer, an inspection can give you peace of mind and detailed information about the condition of the building, the quality of any past repairs, and what improvements may be needed in the future.

Opting out of an inspection can result in significant expense if you discover major problems later, and can even put your business at risk of liability for negligence. The information you obtain from an inspection can help you determine whether this is the right building for your business or whether the asking price is too high. Your inspection should include examination of:

  • The overall building safety and any fire hazards
  • The structural stability of the building, including the foundation and the roof
  • The state of the HVAC system
  • The condition of vertical transportation, such as elevators
  • All mechanical and electrical systems in the building
  • Legal issues related to the title and status of the real estate, and
  • Much more

2. The Buyers Cannot Obtain Financing

Commercial real estate is generally much more expensive than residential real estate, and it can be extremely frustrating to find out that your buyer doesn’t have the funds to purchase or lease the property. If this happens, it’s important to stay firm on the pricing and status of your property for sale.

It can be challenging for real estate agents to verify the financial status of a potential buyer because small businesses may be reluctant to share their personal information. However, your Scottsdale commercial real estate attorney will recommend that you work with a potential buyer to understand their loan qualifications and avoid taking any actions until the loan contingency is removed and the loan documents have been signed.

3. Closing The Transaction Before Zoning Is Approved

A common but unexpected complication can occur when permits and/or zoning changes have not been completed but the deal is closed anyway. Although it can be difficult and expensive to get approval for a zoning change, closing on a commercial real estate transaction before zoning approval can be even more expensive. If the zoning change is not approved, property taxes can be significantly increased, making the property unaffordable for the new buyer–or the building might not even be usable for the desired purpose. Your Tempe commercial real estate attorney recommends that zoning paperwork be filed immediately and is ready to provide legal assistance in obtaining any necessary permits.

4. Incomplete Title Report

Discrepancies with the title can cause a plethora of issues for any real estate transaction, so it’s imperative that the complete title is obtained and any problems are solved before you list your commercial property for sale. Your potential buyer will have more confidence in the transaction if you can provide a clear, complete title that is free of liens and legal discrepancies.

If you are unsure about your property’s title status, it can be helpful to conduct a preliminary title search before listing your property for sale. This may uncover issues such as unpaid utility bills, mechanical liens, secondary loans, and other issues that you may not have been aware of previously, so talk with your Scottsdale franchise lawyer on how to handle these potential hiccups. It’s worth dealing with these problems before listing to promote a smooth transaction with the new buyer.

5. Unexpected Legal Problems

Problems with documentation, such as inadequate legal descriptions, title defects, or liability issues, are common mistakes that arise in commercial real estate transactions. You can avoid these problems by consulting with your Gilbert commercial real estate attorney throughout the purchasing process, verifying that all agreements are in writing, obtaining the correct zoning, and understanding any environmental hazards before you sign a purchase agreement.

Save Time & Money With Experienced Legal Guidance

Whether you are buying or selling commercial real estate, things can go awry, so you need a trusted business attorney on your side. The legal team at Denton Peterson Dunn is ready to represent you every step of the way to promote a smooth and low stress real estate transaction. Contact us to help you resolve commercial real estate issues so you can move forward with your business!


Brad Denton, Business Lawyer
 – Denton Peterson Dunn

1930 N Arboleda #200
Mesa, AZ 85213

Office: 480-660-3249
Email: [email protected]
Website: https://arizonabusinesslawyeraz.com

7272 E Indian School Rd #540-132
Scottsdale, AZ 85251

Phone: 480-690-3283
Email: [email protected]