By Sage M. Friedman, Associate

There are many real estate developers who start out small, often by managing or flipping residential properties. Success naturally leads to confidence and easier access to capital, which in turn leads to larger deals. However, as their business and deal size grows it is important for real estate developers to understand some how the risks in commercial real estate projects differs from their early experiences, and when it might be time to talk to a real estate lawyer.

Building a contract that benefits your business.

Where residential transactions are subject to laws designed to protect consumers, commercial transactions are entirely contractual. If a deal point is not addressed in the purchase and sale agreement, or lease, it likely does not exist. While it may be impossible to predict every possible outcome and issue that could come up, a skilled real estate attorney can help you craft a deal that better anticipates, reduces, and manages the added risks of commercial transactions.

Protecting against the unknown.

There are risks that come up in commercial deals that are less frequent in residential transactions. Common examples include environmental contamination from a previous owner that lurks beneath the surface or an an unpaid invoice from a contractor that may be attached to the property as a hidden mechanics lien. Both could lead to added expenses, including litigation, to resolve. Whether it was an honest mistake on the seller’s part or actual malfeasance, an attorney will help you plan for these contingencies, writing them into the deal so that you and your investors will be protected from any undisclosed perils.

Advising at the right times.

While you may not need a lawyer to hold your hand through every step of the process, you want your attorney to be there to advise you at the key inflection points, such as before you sign a letter of intent and just prior to the close of the deal.

Lending their expertise.

Remember, your lawyer isn’t just there to paper the deal, they are there to give you the benefit of their experience. Both about the law, and the idiosyncrasies of your market. Take advantage of it, and learn from the common problems they’ve seen over and over again without falling victim to them yourself.

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