Legal Considerations When Buying a Commercial Property for Your Business

For Sale Sign in Grass
Businesses thinking of purchasing properties in which to conduct their operations as opposed to continuing to lease should consider these factors.

These days, many businesses are considering purchasing properties in which to conduct their operations as opposed to continuing to lease. For some businesses, the interest in purchasing relates to concerns over rising rents, fears of increasing inflation, or the real potential for increases to interest rates. Some businesses simply want more control over the property upon which they operate.  For any business thinking of purchasing property, here are three factors which should be carefully considered.

Can I Legally Operate My Business on the Property?  This relatively simple question can get very complicated when considering the increasingly complex zoning and land use restrictions imposed by local governments. Cities and counties across Georgia are more frequently using ordinances to manage and control the types of businesses operating within their jurisdiction. Unfortunately, we have seen businesses purchase properties under the assumption they could operate their business in that location, only to find out that local zoning and land use ordinances will prevent them from using their property as intended. Often this mistake occurs because simply looking at the current use of a property can be devastatingly misleading as to whether that use is legally permitted.

Before making an investment in a property to operate your business, it is important to consult with a knowledgeable land use attorney to make sure that the applicable zoning and land use restrictions will allow your business to operate at that location.

Are There Issues With Title? Commercial properties in many areas of Atlanta have been used for a wide variety of purposes for well over one hundred years. This long history of use and redevelopment can create a complicated record of ownership which may be full of potential issues that could prevent the ability to obtain good title through a purchase. Over the years, we have seen issues involving the estates of individuals who passed away decades ago, problems with unpaid taxes and utility bills, uncancelled security deeds from loans which were satisfied many years ago, and even environmental problems – all of which can cause problems with title and prevent a purchase from occurring.  This is where a good closing attorney who can think creatively to address novel title issues can be very valuable.

If you are interested in a property which you know has an extensive history of usage and ownership, it may be worthwhile to have title research performed on the property early on, and to have good legal representation engaged who can work through title problems as they arise in order to facilitate a successful closing.

What is the Potential for Disputes with the Neighbors?  When considering purchasing a property for a new business or for a use that will require significant construction, there is always a potential for conflict with neighbors, and a buyer certainly does not want to see their business plans or financing needs delayed or jeopardized due to a lawsuit.  Accordingly, when considering purchasing a new commercial property, it is prudent to carefully consider the impact your business will have on the surrounding owners and occupants.  Who is located nearby and what are they doing on their properties? Will traffic and parking be affected by your business? Will your business produce noise or odors that will impact neighbors?  How could construction change water runoff for downhill properties?  Anticipating potential issues and engaging with neighbors early can help a purchaser avoid costly disputes down the road. 

Purchasing the right property can be a profitable opportunity for a business, but it also represents a significant investment with attendant risks. Accordingly, it makes sense to carefully evaluate any potential property prior to purchase, and that evaluation starts with asking whether your business can operate on the property, considering possible issues with title, and evaluating the risk of conflicts with neighbors.  If your business is considering purchasing property, contact the real estate attorneys at Williams Teusink, LLC to discuss the property and develop strategies to resolve potential problems before they arise.