Structuring Commercial Real Estate Transactions
Legal advice on commercial real estate transactions
Real estate transactions are one of the most common types of transactions. The purchase of commercial real estate is as relevant as the acquisition of real estate for use by individuals for personal purposes. Depending on the stability or instability of the economic situation in the country and the world, the number of transactions for the purchase of commercial real estate grows or falls. At the same time, the support of such transactions by qualified lawyers is as important as real estate purchase and sale transactions for personal purposes of individuals.
In an entrepreneurial environment, transactions for the purchase of commercial real estate may be accompanied not only by purely real estate purchase and sale transactions, but may also be burdened with additional obligations, for example, when buying real estate with debts, or buying real estate with investment funds, etc. In this case, the conclusion of a contract for the sale of only commercial real estate becomes unacceptable. It is necessary to liquidate debts that have formed during the operation of commercial real estate, or to formulate all the main investment positions and only after that conclude the main contract for the sale of real estate.
In principle, as for any other transaction, the first and, perhaps, one of the most important elements is the legal analysis of the situation in which the purchase of commercial real estate is carried out. Legal analysis is necessary in order to maximally foresee and reflect all the important points of the transaction and minimize possible risks. As a rule, such transactions are divided into several contracts and agreements in order to resolve all possible issues that arise in the course of such transactions. It is important to note that such transactions are often extended in time, because lawyers need to study all aspects of the ongoing transaction, analyze possible risks and reflect the aspects of the planned transaction as profitably as possible on more favorable terms for all parties to the transaction. For a more thorough study of such transactions, their structuring is applied, which can be divided into several stages:
- Analysis of transaction conditions. At this stage, it is necessary to assess the main positions of the parties and identify what each is counting on, while avoiding possible inconsistency between the parties.
- Verification of the commercial real estate object, the parties to the transaction, the powers of the managers (if the transaction is between two legal entities), etc.
- Analysis of possible legal risks. In case of their detection, options for their minimization and exclusion are being worked out.
- Negotiations between the parties to the transaction, the formation of the basic requirements of each of the parties to the transaction.
- Development of the deal structure. At this stage, the main provisions of the planned transaction are determined: parties, third parties, methods of real estate transfer, additional rights and obligations of the parties, etc. Also a significant point at the stage is the collection of all necessary documents and certificates necessary for the transaction.
- Documentation of the transaction.
- Implementation of the agreements reached by means of signing the contract and their execution.
In essence, transaction structuring is the division of all transaction processes into certain stages, which allows you to understand each necessary stage, identify the needs of the parties and form and conduct a transaction in such a way that most of the interests of the parties are taken into account. Structuring allows you to divide a transaction into separate stages and take into account all possible risks at each stage of such a transaction.
In addition to the main major tasks in the implementation of the transaction, also in the course of structuring, small, but quite significant issues, such as tax accounting, are identified and agreed upon. Meanwhile, the purchase and sale of commercial real estate is a certain risk for both parties to the transaction, and each party prefers to receive not only the most favorable conditions for it, but also certain guarantees for the successful completion of the transaction. The need for such guarantees is also clarified during the structuring of the transaction at the analysis stage and can be reflected in the terms of the contract, however, examples of such additional conditions may be security mechanisms, for example, a letter of credit or a safe deposit box.
An important point is the legal support of all stages of the transaction, the further fate of such a transaction and the interests of the parties depend on the correctness and legality of all its provisions. As a rule, it is rather difficult for an entrepreneur to conduct such a difficult transaction on his own, this may be due to the fact that it is not always possible to understand all the intricacies of various kinds of transactions in a short period of time. That is why business, as a rule, seek help from experienced and qualified lawyers to support transactions for the purchase of commercial real estate. A significant point when choosing a lawyer to support a transaction for the purchase of commercial real estate is his experience not only in general legal practice, but also in similar cases, including contesting real estate transactions. At the same time, structuring a transaction when purchasing commercial real estate allows not only to reduce possible risks, but also to increase guarantees for the parties to the transaction, exclude the possibility of challenging the transaction, and, if it is properly executed, minimizes the possibility of additional questions from regulatory authorities.
- Legal advice on commercial real estate transactions
- Preparation of documents for the implementation of a real estate transaction
- Transaction support for the purchase of commercial real estate
- Representing the interests of the client in the purchase of commercial real estate