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Can due diligence prevent future compliance issues?

On Behalf of | Mar 30, 2022 | Commercial Real Estate

For many people, the process of buying and selling commercial real estate represents a confusing, intimidating business challenge. From avoiding restrictive provisions in a buy-sell agreement to uncovering zoning and land use issues, these transactions demand a detailed investigation. Fortunately, the due diligence process can uncover numerous challenges that a business owner can avoid.

While many people envision the process of due diligence as a step-by-step system of check boxes, this is the wrong mindset to adopt. This process can lend significant insight into challenges, potential risk or future compliance issues. Often, a thorough document examination can reduce compliance risk.

  • Verify the accuracy of the title: The title provides a key to the history of the property. From ownership and liens to any easements, the title generally represents the cornerstone of any effective investigation. Further, it is important to schedule a thorough survey of the commercial property to ensure the description is correct in all documents. In addition to the lot size, the survey could reveal boundary lines, access roads, soil condition and surface water.
  • Zoning and property codes: A significant part of risk analysis and compliance falls squarely on a thorough understanding of land use, zoning laws and environmental regulations. During this process, it is wise to suggest any revisions that might be necessary or anticipated changes regarding use. From examining zoning rules and property codes, it is possible for buyers to ensure compliance with any commercial property restrictions.

Whether it is your first commercial real estate transaction or your tenth, it is wise to thoroughly research the target property and identify any potential issues with the title, property codes and land use restrictions. Due diligence can uncover problems and enable a detailed risk assessment on any property.