What Do Commercial Real Estate Attorneys Do?
By OPLawSocialMedia on Real Estate
Video: What Do Commercial Real Estate Attorneys Do?
FAQ’s With Roy Oppenheim
Full Transcript: So one of the questions we get is what does a commercial real estate attorney do? And that’s a very broad question, of course, commercial real estate attorneys are currently involved both in representing buyers, they’re involved in representing sellers, and they’re also involved in representing the bank who’s lending the money to a transaction, and so really it’s three questions.
So let’s start off with what a bank lawyer is going to do when they’re lending money on the acquisition of a commercial real estate. And the answer is really simple. They’re going to make sure that the bank is getting good collateral, that the documents are executed properly, that they’re getting a title opinion. Excuse me, a legal opinion from usually the buyers’ counsel confirming that the representations that the buyer made are true and correct, and more importantly, they’re going to make sure that the zoning’s okay.
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There’s no environmental problems, that the leases are all in place. And that there are no other outstanding potential issues that you could have, such as like lead paint or asbestos which are all part of the environmental area. But also that the place is zoned properly, that the people could can occupy the property and can run their businesses appropriately, so that they’ll be enough cash flow to pay for the mortgage.
So that’s typically what a bank lawyer does. And then, of course, they negotiate the mortgage documents. And of course, they review the title insurance and they review the closing statement. And they’re basically protecting the bank’s interest. So now let’s talk about what the buyers’ lawyers do because they do something similar. They want to make sure that all the issues that the bank’s concerned about are resolved. And of course, they want to resolve it not just for the bank but also for themselves, so they want to make sure that there’s no zoning problems, that there’s no land use issues, that there no environmental issues.
And of course, they’re going to negotiate the loan for the buyer with the mortgage company or the bank. And so it’s going to be some negotiations there over lots of terms and conditions and over covenants and various representations, and so the buyers’ attorneys are going to do that. Of course, the buyers’ attorney is also going to make sure that the title is clear. They’re going to review the title and insurance policy, and make sure the type of commitment.
And then they’re also going to make sure that there are title issues, that those issues get cleared before closing. And of course, the buyers’ attorney is also going to negotiate the contract with the seller to make sure that they’re getting a fair deal, and then everyone knows who’s on first and who’s paying for what, and that deal is going to fly. And of course, they’re going to make sure that there any tenants, that the tenants have confirmed that their rent is not in default, and that the lease is not in default, and the landlord’s not in default.
Those are called estoppel letters that typically get a sheet to tenant. And so that’s what the buyers’ attorney is going to do. So finally, what is the sellers’ attorney doing? The sellers’ attorney is going to do everything that the buyer and the bank is asking the seller to do in order to get the deal done. If it’s a title issue, the seller is going to help clear the title problem. They’re going to have to help get all the tenants to sign the estoppel letters and make sure that the tenants are happy because if they’re not happy, then the buyers’ not going to be happy, and the banks not going to be happy.
And of course, the seller’s going to negotiate the contract between the buyer and the seller, as it relates to the actual purchase of the real estate. And I think that’s it for now. Thanks.
Areas Of Commercial Litigation
- Business Torts
- Contract Disputes
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- Intellectual Property
- Insurance Coverage
- Partnership Disputes