Q: What is a commercial property purchase?
A. Usually any purchase of real estate other than a one to four family residential property.
Q. Is a certificate of occupancy required on the resale of a commercial property?
A. This varies from town to town as there is no Statewide requirement. A simple call to the municipal clerk will usually answer this.
Q. What is a bulk sale notification?
A. The State of New Jersey created the bulk sale process to ensure that it is paid any tax due on any sale of commercial property. This involves preparation and submission of a bulk sale notification form to the State, which will then advise the buyer’s attorney whether to hold any portion of the sellers proceeds pending submission of all required State tax returns and payment of tax due. If no tax is owed, or if the seller does pay the tax, then the State will issue a clearance letter.
Q. What is different about a commercial loan rather than a residential one?
A. Typically, the lender employs an attorney at the buyer’s expense to represent the lender’s interest in the transaction. That attorney may prepare loan documents and will review title to ensure that the lender is protected.
Also, the lender may require the buyer’s attorney to provide an opinion letter that the loan is valid and that all lender requirements have been met.
Q. What is a Phase I environmental study?
A. Lenders are typically concerned about the environmental history of commercial properties and will particularly focus on any contamination from underground tanks as well as any auto related businesses, dry cleaners and industrial properties. Therefore the lender will require the buyer to pay for a Phase I environmental study from a consultant of the lender’s choosing. It is important that the buyer ensure that the consultant addresses the report to the buyer as well as the lender so that the buyer is also protected.
Q. What if there are tenants in the building?
A. The buyer always wants a contingency to review all existing leases, whether the rent payments are current, and to have letters of attornment provided by the seller notifying the tenants that ownership has changed, at time of closing. The buyer may want the seller to remove tenants prior to closing if that is possible.
These are just a few of the many items that come up on commercial real estate purchase transactions. As New Jersey real estate attorneys and litigators, Whelan & Whelan has decades of experience on these transactions. Please contact us today for representation and consultation.
