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FAQ - Environmental Law

Real Estate Transactions

Real Estate Transactions


Real estate law involves the purchase and sale of land for business or residential properties. The reason that commercial and residential real estate are generally considered to be separate areas of legal practice lies with the different and often highly specific needs of the two different types of purchasers. In commercial transactions, it is not enough merely to obtain clear title to the property; the commercial buyer usually has a specific business use in mind and must make certain that the property in question is suitable not only in terms of size and location, but also with regard to environmental concerns, zoning and other land use-regulations, the adaptability of any buildings on the land to the proposed use, and often the property's ability to generate income. These issues are of lesser relevance in residential real estate transactions.

An attorney experienced in real estate and environmental law can assist both buyers and sellers in a real estate transaction, whether it involves commercial or residential real estate. Because of the increased complexity of commercial real estate transactions, however, the prudent buyer or seller of commercial property would not proceed without legal counsel and representation.

Real Estate Transaction Issues

At the time of purchase, attorneys for the buyer and seller will generally conduct extensive negotiations over the contingencies to be included in the purchase agreement. Contingencies allow the buyer and seller to finalize the major terms of the sale transaction, such as the price, while making the final closing subject to the occurrence or non-occurrence of certain events. Generally, the buyer will want as much opportunity to investigate the property as possible before making a final commitment to purchase, and will request substantial discretion to back out of the agreement if after investigation the buyer believes the property does not meet its needs. The seller, by contrast, will be hesitant to take the property off the market for any significant period of time unless he or she is reasonably confident that the closing will occur. Much of the legal negotiation process, therefore, is an attempt to balance the seller's need for certainty that a sale will occur against the buyer's need for certainty regarding the condition of the property and the uses to which it can practically and legally be put.

Some common issues that are addressed in negotiating a commercial real estate transaction include the following:

  • In transactions between business entities such as corporations, either party may wish to make the transaction contingent on approval by its governing body, such as its board of directors, its partners, or its executive committee. This approval may also be contingent on an appraisal that justifies the purchase price.

  • The buyer will generally want the right to confirm zoning or the availability of any necessary rezoning or subdivision. The buyer will also want to make the agreement contingent on obtaining any necessary building permits, environmental permits, sign permits, or similar permissions.

  • Occasionally, a survey of the property may be desirable. The purchase price may be based on, or the transaction contingent on, the size of the parcel or the number of square feet that can be used for buildings and other structures. The number of square feet allowed may in turn be limited by either physical factors (presence of wetlands or the like) or zoning restrictions.

  • Inspection of the physical condition of the property is often important. This may involve both the condition of the land with regard to factors such as elevation, drainage and soil compaction, and the condition of any buildings on the property.

  • Environmental concerns are an area of growing significance in commercial real property law. The buyer will want to obtain environmental representations and warranties from the seller and may wish to conduct additional environmental reviews or studies. Sometimes the buyer's financing is made contingent on an environmental review.

  • Access to the property may be an important issue, particularly if a change in use of the property is contemplated.

  • The buyer should evaluate all income and expenses relating to the property and obtain a copy of any leases or contracts that cover the property, including maintenance and management contracts, service contracts, and equipment leases. The purchase agreement may be contingent on the ability to assume those contracts and leases, or, alternatively, on the ability to terminate them.

  • Both the buyer and the buyer's lender will require that any existing tenant leases be confirmed by an estoppel certificate or letter. An estoppel certificate is a document to be signed by each tenant in which the tenant confirms the existence and enforceability of the lease and the amount of rent, states that there are no undisclosed terms or agreements, and certifies that the tenant is aware of no defaults under the lease.

  • Many commercial transactions will also involve a financing contingency. Often, the lender will be required to approve the transaction.

  • At closing, the buyer will usually require that the purchaser sign a bring-down certificate, which confirms the representations and warranties made at the time the purchase agreement was signed. The buyer may also want the right to make a confirming inspection immediately prior to closing to make certain the condition of the property, buildings, and any inventory have not changed significantly since the purchase agreement was signed.


The complexities of a commercial real estate transaction, combined with the many government regulations that govern the operation of a business, including those of environmental import, should prompt prudent buyers and sellers to obtain advice from a qualified real estate attorney throughout the process. When looking for an attorney to represent you in a commercial real estate transaction, be sure to ask questions about his or her training, track record, and experience. When you find an attorney that is right for you, you are able to form a cohesive team that works together to achieve the best possible outcome with the least amount of stress and cost.

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