Commercial Real Estate Laws to Know


Mess with a bull you get the horns, as the saying goes. When it comes to commercial real estate, the last thing any of us want to worry about is the legality of the situation. But it comes with the territory.

It’s another reason why it’s necessary to work with an established group familiar with properties and applicable laws.

One must also be well aware of his or her “investment sense.”

In recent weeks, we spoke about the dangers of crowd funding., advising readers of the pitfalls of crowd funding operations, and how to avoid bad situations.

I wanted to touch on other legal issues any one involved in commercial real estate should be aware of. On top of that list is consultation with a legal professional or group that fully understands how the law works.

There is landlord and tenant law that varies by state, for example, that protects the rights of both parties. This can include payment of fees, taxation, privacy rights, duration of tenant occupancy, termination, security deposits, and access to property. Landlords are in business to make money and protect their investments. Tenants want to be happy and have rights protected.

Bottom line is that this relationship is crucial, and depends heavily on compliance with the law.

Disclosure laws also vary by state, and are concerned with conditions, locations, and restrictions on the property. Owners, for example, are required to notify of asbestos or lead paint issues. When it comes to commercial property, renters must be made aware of access use and utilities, for example.

In California, for instance, the seller of commercial property must disclose if the property is located in a hazard area, including earthquake faults, or flood, according to the Office of Legislative Research. New Hampshire requires seller notification of radon and lead paint.

Contract law regarding lease and rental agreements come into play as well, as legally binding contracts. A contract law attorney should be involved with this. All terms must be in place, including payments.

Insurance laws are part of the game, too. These also vary by state. A property owner typically wants his or her investment covered at all times. It covers the property and in many cases, the property of the tenant. That same insurance policy does not usually protect the tenant or most of that tenant’s property. In those cases, the tenant is required to have a certain amount of coverage to meet a property owner’s requirements.

As always, it’s essential that you – or the group you choose to work with – understand the laws applied. It’s also important that all investors used their “investment sense” with due diligence.

Otherwise, you’ll mess with the wrong bull, and get the horns…