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Commercial vs. Residential Real Estate

Commercial vs. Residential Real Estate Contracts

If you are considering buying property for your business, you may be surprised to discover just how different the process is - from purchasing a home for personal use.   Specifically, the contracts used in commercial real estate are very unlike those used in residential real estate.

Following are a few common distinctions between the two types of contracts:

• A commercial real estate contract should ensure that the intended purpose of the property is permitted under local zoning ordinances.   Generally, zoning ordinances do not come up in residential real estate contracts, unless the buyer intends to make specific renovations to the property, or use it for a business purpose.   In a commercial enterprise, however, it is typical for the buyer to use the property for a completely different type of business than the seller.   If you plan on purchasing a property, make sure that it is stated in your contract that the property is, or can be, zoned for your particular business purpose.
• Commercial real estate contracts can include options.   An option refers to the right of a seller to allow the buyer to purchase real estate within a certain timeframe.   The seller can offer to pay the buyer an option fee in exchange for the privilege of being the sole buyer of the property within that timeframe.   As long as the option exists, the property cannot be sold to another buyer.   Sometimes, it can be negotiated that all or part of the option fee is applied toward the purchase.  It can also be forfeited to the seller if the potential buyer decides not to purchase.
• Less protection, but more flexibility, is offered in a commercial lease than in a residential one.   State and local laws are often designed to protect tenants by ensuring that landlords meet certain basic requirements in the living conditions of a building.   However, since commercial leases are viewed as contracts between two informed business people, the government feels less protection is needed from the lessor.   Instead of offering as much protection, many more terms of a commercial lease can be negotiated than in a residential lease.

Contact an experienced Tampa Attorney for help with your real estate legal matters.