Do I Need a Lawyer When Buying Commercial Property in Texas?

When you buy commercial real estate in Houston, TX, it’s always advisable to have a commercial real estate lawyer on your side from start to finish. Commercial transactions are far more complex than residential, and it’s important to protect your interests. A lawyer is focused on doing just that: protecting you throughout the process.

Why Having a Commercial Real Estate Lawyer Is Important in Houston, TX

Perhaps the first and simplest reason that you need an attorney is that real estate transactions for commercial properties are typically much more complex than those for residential properties. The contracts that you will face are much longer and more complicated, and the agreements often include clauses that would never appear in a residential sale.You need to have a thorough understanding of Texas real estate law to safely get through this process and avoid missing some critical detail that could have important consequences for you in the future.

You Need to Negotiate

When you have a real estate attorney on your side, one of the biggest benefits you gain is negotiation skill. Unless you have personally negotiated these sorts of transactions multiple times, it’s unlikely that you’re going to be better at bargaining than a lawyer, as bargaining and negotiating are a fundamental part of what a lawyer does.An experienced real estate lawyer will protect your interests throughout the negotiations, give you insight and advice at each step, help you secure better terms, negotiate any special contingency clauses, and flag up to you all areas of concern that you may need to deal with before you can actually close the deal.

There’s Great Potential for Loss

When you buy commercial property, you’re usually talking about an especially significant investment. It’s absolutely essential that this much investment be carefully protected throughout the process. An attorney will be able to identify any potential issues that you may have missed and provide extra protection from risks.

You Get Better Advice

If you already have a broker, you may legitimately wonder whether you actually need a real estate lawyer at the same time. It’s important to know that the Texas Real Estate Commission specifically forbids real estate brokers to give any legal advice. This means that, even if your broker has an enormous amount of experience in commercial property transactions and actually does know commercial property law inside and out, they are still not permitted to share that knowledge with you by law.

Beyond that, your broker is not exactly a neutral party. Your broker is not going to get paid until the sale goes through, and that unavoidably incentivizes them to smooth things over in such a way as to ensure the transaction gets done. It’s also in their best interest to get it done as soon as possible so they can move on to the next sale. An attorney is entirely objective and on your side completely. Your attorney’s job is to protect you and your money no matter what, and your attorney isn’t dependent on the sale of the property to get paid. Your attorney will make sure that all due diligence is done.

You Have Extra Risks to Avoid

Commercial property comes with more risks than most residential properties. You have to be concerned about hazardous materials, and you have to worry about zoning issues. There can be liens on the property, easement issues, title problems, and even issues with access, depending on where in Houston you’re buying. Then there are environmental issues and building codes that can be much stricter when it comes to commercial properties.Also, is this property actually going to be suitable for what you want to do with it and the type of business you intend to put in it? Again, your broker’s main focus is on getting the property sold. Your attorney’s main focus is on protecting you. Your attorney will help you think through whether the property is suitable for what you want to do with it and protect you from these various risks.

There Are More Title Concerns

Many people erroneously believe that if they have title insurance, the title to the property is clear and free. This is not true. Title insurance is just insurance, and as with any type of insurance, there are different types of policies and various exceptions. The insurance policy is typically issued based on a preliminary commitment, but once you dig further, you may certainly find some problems.

Most insurance policies also specifically exempt certain issues from coverage entirely, such as easements, mineral drilling, boundary disputes, and more. Most insurance policies will tell you specifically that they are only ensuring you against exemptions reflected in the public record, too. This means that if you fail to get a survey or other inspection of the property, and something later turns up related to the title, this would not be covered.

You Could Save Money

It may feel like you’re losing money when you hire an attorney, but it is typically much cheaper to pay a real estate lawyer at the beginning of a transaction to help you work through all the predictable questions and issues rather than having to hire an attorney later on in the process if you have to go to trial.An attorney also protects your interests financially by making sure all the legal documents and contracts are properly written and reflect your best interest. An attorney can help you get through the process more quickly than you otherwise could, which also saves money, and can help you ensure that everything is done right the first time, so you don’t lose money by having to redo forms or contracts.

Responsibilities of Your Real Estate Attorney

Reviewing and Negotiating

Your attorney will look over the terms of any contract very carefully. With their particular knowledge of legal language and their understanding of the possible contingencies involved, they can quickly identify whether there are any terms or clauses that are unfavorable to you which you may otherwise miss, particularly if these clauses are hidden in “legalize.”

As stated above, your attorney can also then engage in negotiations on your behalf, and it’s common to find that, once you get a real estate attorney, negotiations automatically start going more smoothly. Once the seller is aware you are protected, they have more incentive to act fairly. Essentially, you’ve removed much of the temptation to try to sneak something past you in the hopes you don’t have enough familiarity with real estate law to notice.

All Due Diligence

There’s a lot that needs to be done before it’s appropriate to even begin negotiations. All the documents related to the property have to be carefully reviewed: leases, surveys, titles, zoning regulations, and the results of all environmental and building inspection reports. Your attorney will take over this process for you and will identify any issues or potential liabilities.

Dealing With Escrow and Closing

If you decide to proceed with buying the property, your attorney will then facilitate the process by coordinating with the title company, preparing all the documents required for closing, and overseeing the transfer of funds.

If you’re interested in buying a commercial property, don’t go into the situation unprotected. Contact Hensley & Krueger, PLLC in Houston right away for help.