Commercial property differs from residential property in that its sole purpose is to generate income. In most cases, commercial property is purchased by a corporation rather than an individual. Purchasing and selling a commercial property is a complex process, and consideration needs to be given to existing tenants, existing leases, triple net cost recovery, zoning bylaws, municipal and fire safety compliance, service contracts, and environmental waste management.
Additionally, lenders will often require greater security and personal liability for any loans or mortgages given to buyers of commercial property. This security takes the form of general security agreements, promissory notes, environmental indemnifications and assignment of rents. Buyers of commercial property need to become well informed as to what their rights and obligations are under these agreements.
When purchasing commercial properties it is best to seek legal representation early in the process to ensure all items are taken into consideration prior to a contract being drafted.