Due diligence is critical in commercial real estate transactions
Because the concept of buyer beware applies to commercial real estate purchases in Florida, due diligence is crucial and rests on the shoulders of the buyer.
The Law Office of David Steinfeld guides both buyers and sellers in structuring certain aspects of commercial real estate transactions. Depending on the property, due diligence may include reviews of rent rolls and the operation of a business or businesses on the property or it may focus more on the condition of the property itself.
Who should I use for due diligence
Helping the purchaser bring together a qualified team of professionals, such as accountants and property inspectors, is a value that the Law Office of David Steinfeld can bring to the proverbial team in addition to reviewing purchase and sale agreements.
Florida law requires that real estate sales occur under written contracts, but unlike residential transactions that largely now use form documents approved by the Florida Board of Realtors known as FarBar contracts, such standard contracts are rare in commercial transactions.
Thus, having an expert business litigator like David Steinfeld who has experience litigating breaches of commercial real estate contracts is of great benefit to parties that intend to buy or sell commercial real estate in Florida.
Disclosure obligations for residential vs. commercial property
In 1985, the Florida Supreme Court decided in the case of Johnson vs. Davis that "buyer beware" does not apply to residential transactions. The ruling was that sellers must disclose known material facts that are unobservable to a buyer. So in Florida, from that time forward there has been a distinct difference in the manner in which residential and commercial real estate transactions are handled.
The seller's disclosure requirement is included in all standard FarBar real estate contracts. In addition, most brokers require sellers to complete a separate disclosure form. This discussed what happens when a seller fails to disclose those defects.
What should you do if you discover a defect after closing
It is important to bear in mind that the only actionable defects are those deemed material. That is those that are a significant percentage of the purchase price. While caselaw has not precisely defined this number, some cases have held that ten percent or more of the purchase price is considered material. But that does not mean that less than ten percent is not material. Whether a defect is material depends on the unique circumstances of the property transaction.
When a buyer believes that a seller has failed to disclose a material defect usually the discovery of the situation occurs shortly after closing. Therefore, it is important to consult with an experienced and expert litigation attorney like David Steinfeld, who has tried these types of cases to verdict before juries and judges to determine the next and best course of action for your unique situation.
While a lawsuit may be one option to resolve the situation, it is not the only option available. Lawsuits in general are expensive and time-consuming, but these types of lawsuits in particular often require a significant number of depositions and, therefore, can become very expensive and very time-consuming. Therefore, it is prudent to carefully examine all of the options available together with David Steinfeld in order to make informed decisions in response to the unfortunate situation.
Should you use a home inspector
Although the seller of a home in Florida is obligated to disclose material defects that they actually know of, sometimes sellers do not make such disclosures either as a result of a lack of knowledge or intentionally. As the saying goes, sometimes the best defense is a good offense, which when translated into residential real estate transactions mitigates in favor of retaining qualified inspectors to thoroughly assess the property.
The Law Office of David Steinfeld has utilized a number of such inspectors as expert witnesses in lawsuits concerning disclosures and can guide and recommend clients to these professionals as part of guiding and assisting either a buyer or seller in such real estate transactions.
What are the key documents use in the purchase and sale of real estate
Florida law requires that all real estate transactions must be evidenced by a writing. So a handshake agreement to buy or sell property is not enforceable in Florida.
Residential property purchases are commonly documented by a standard contract developed jointly by the Florida Bar and the Board of Realtors. It is called the FarBar contract.
Commercial property is unique as compared to residential real estate. There is no standard approved form for such transactions. They are specially crafted by real estate attorneys who practice in the transactional arena.
Real estate services of the Law Office of David Steinfeld
The Law Office of David Steinfeld regularly handles real estate contract disputes and litigation concerning landlords and tenants. But the Firm does not perform closings or provide title insurance. The Firm refers those to local attorneys who do that type of work.
Chapter 83 of Florida’s Statutes is the Landlord-Tenant Act. That defines the obligations applicable to landlords in residential tenancies. However, the obligations of landlords and tenants in commercial rentals is largely governed by the terms of their written lease. The Law Office of David Steinfeld reviews commercial leases to assist and guide businesses in renting space for their operations.
Real estate investment LLCs
Real estate is considered a business in Florida. Lawsuits over real estate are even covered in the business litigation board certification exam.
While many people purchase a home in which to live, others buy for investment. This is done in their name or through a business entity, which may involve several investors.
Properly structuring a business for real estate investments is a service that the Law Office of David Steinfeld regularly offers.
The Palm Beach Business Lawyer Blog
Board Certified expert in Florida business law, David Steinfeld has almost 25 years legal experience.