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More verifications may be needed in a commercial purchase

Let's buy a place for your business! It can't be that hard, right? Maybe you've bought a house and thought it wasn't that hard. But let's take a minute to think. Although the process may not be that difficult, it is different from a home purchase and any misstep can cost you big in taxes, fees and extra work later.

Just like any property purchase, escrow will be a first and important part of the exchange. Escrow helps build trust between the buyer and seller through a third party, which holds a certain amount of money until the deal is concluded or one party pulls out. Since there may be more parties or money involved in a commercial real estate deal, the paperwork for escrow may be specialized and extensive.

When parties in a transaction are organizations instead of people, which is often the case with commercial real estate, a little more due diligence is often required. The existence and fitness of partnerships, corporations or other holding companies must be verified before a deal is completed. This is best done earlier in the process.

In the end, a person still has to sign a deal on behalf of each organization. Further verification is required to make sure a person is legally able to do this. This ability is called signing authority. A corporate charter or an official letter from the officers or board of an organization is often how signing authority is verified.

There are perhaps no better friends during a commercial property closing than an attorney. A lawyer can represent a party's interests and help coordinate these verifications to make sure that the search for a business location doesn't leave anyone out in the cold.

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