“Esther, I find yours to be the most comprehensive and consumer and client-oriented policy statement I have encountered in my 45 years in the real estate business!”
Ault Commercial Realty, Inc.
PO Box 6306
Rutland, VT 05702
Some clients look to their commercial real estate brokers in this market to draft or provide legal contracts (Leases, Purchase & Sales, contract addendums) but this is discouraged as it is viewed as practicing law without a license. The residential fill-in-the-blanks forms are viewed as inadequate for the complexities of a commercial transaction. Brokers CAN draft and provide “Letters of Intent” (LOI) to Purchase. A Commercial Real Estate Attorney drafts a Purchase & Sale Contract using a broker’s LOI.
In commercial real estate the attorneys hold the contract deposits in escrow, not the brokers.
There are a few key things that I advise buyers:
- Be sure to meet with a civil engineer before you write an offer in order to understand your time frame, cost & feasibility for acquiring Municipal & State permits
- I recently had an administrative change of use permit for a 5000 SF deal cost $46,000. in WW fees & PM peak hour trip end fees.
- Hire a commercial real estate broker to represent you as a buyer before you write an offer. Many commercial brokers specialize so it is prudent to ask the broker how many transactions they have completed of the type you are contemplating. While I have a wide range of commercial experience with a high rate of success across many transaction types, I tend to specialize in owner-user deals and metal buildings. Here is a link to a local commercial real estate organization that has a list of members – http://www.ccrea.com/member/public_roster
- Be sure to meet with Municipal Planning & Zoning to review the file on the property. A phone call asking if the use is listed as permitted or conditional does not answer questions for instance about traffic impact fees, municipal water allocation letters, & parking waivers. Meeting with West St (ACT 250 & WW) & Public Safety (State C/O) and Municipal Fire Marshals may also be advisable. Email Esther to request contact information for these entities.
- Commercial real estate contracts generally require the buyer to perform a preliminary title search in the first 30 days of the standard 60-120 day due diligence period. This is so that there is enough time left in the transaction to address any issues without delaying the closing.
- “We recommend to all prospective purchasers to perform proper due diligence before purchasing a property, especially commercial and industrial properties.” – John Schmeltzer, Environmental Analyst, VTANR/Dept of Environmental Conservation Waste Management and Prevention Div. (for information, please contact) Trish Coppolino – Sites Management Section, Chief, Brownfields Program Manager, Patricia Coppolino, 802.249.5822,
What to expect from your commercial broker…your broker will:
- Independently confirm all information provided to you
- Collaborate with your commercial real estate attorney on business terms (not legal terms) for your lease or purchase and sale contract
- Schedule your meetings with the engineers, with Planning & Zoning, with West St & Public Safety
- Know the questions to ask in these meetings
- Take notes for your file
- Be at your side in any DRB hearings
- Schedule and be present for contractor walk- throughs of the property
- Track your contingency dates & permit time frames throughout your estimated 60-120 day due diligence period
Working with an unrepresented buyer:
If an unrepresented buyer is touring one of my listings, I will show that buyer the property as many times as they wish…I will still split my fee 50/50 with another broker at any time the buyer seeks representation, even up to the day of the closing. That is only fair in my mind to the consumer who deserves representation at any point in a transaction & to my seller who is counting on me to put a deal together with a minimum of stress, wasted time & liability. A buyer with representation cuts my seller’s liability in half so a buyer’s rep is always welcomed. One of the buyer brokers responsibilities is to independently confirm all information involved with the transaction for his or her buyer.
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