Starting or moving a business is a different practice than beginning or expanding a household. Business owners have to be aware of the ways to protect themselves and their assets while engaged in real estate transactions for retail, office and storage space for a business.
Commercial real estate deals normally involve two or more organizations, such as a corporation or partnership, instead of individuals. These business entities are often created to shield investors, managers and others involved in a business from liability regarding personal safety hazards or financial risk.
Some legal entities that already exist for business before a new property is acquired may create a new organization to protect the original organization. Creating these institutions is a largely simple process, although a legal advisor is often recommended to verify all legal requirements have been met.
Although the parties in a commercial property purchase are often corporations or other legal institutions, a person still has to finalize the process with a signature. This part of the transaction requires proof of signing authority, a legal document verifying who can sign on behalf of a business entity.
It is important to verify who can sign as early as possible in the process. Purchasers should identify the person or persons with signing authority and get documentation from the leadership, board of directors or other managing officers.
This documentation must be notarized along with the assent of business officers for the commercial purchase. A legal advisor can assist with all steps of the process, from creating a legal entity to opening the doors of a new business location.
Source: Property Metrics, “Definitive Guide to the Commercial Real Estate Closing Process,” J. McBride, accessed Aug. 28, 2017