If you are familiar with the process of closing on residential properties but have yet to embark on purchasing a commercial property, you might wonder how the process will differ. Commercial real estate purchases tend to be more flexible but at the same time offer less protection for buyers. If you are responsible when doing your planning, you should be able to make a lucrative investment.
It is important that you understand fully the key considerations when closing on a commercial real estate deal so that you can plan your timeline and have realistic expectations.
Closing with escrow
Just as in residential real estate purchases, it is standard to use a neutral third party to help you and the seller with closing the deal. Escrow companies will transfer the deposit and the full value of the property to the seller upon the closing of the deal, and simultaneously, they will transfer the deed to the buyer.
Due diligence and the lack of the Real Estate Settlement Procedures Act (RESPA)
RESPA is a federal law that mainly protects buyers of residential properties from deception. It means that sellers of residential properties must put in place warranties and guarantees about the state of the property. It is important to note that commercial real estate transactions lack such protections for buyers, making it vital to verify that the property is as advertised. The onus of due diligence is definitely on the purchaser of the property to have it thoroughly inspected for flaws.
If you are embarking on your first commercial real estate deal, you should make sure to understand how the law works in Florida.