This article addresses some salient facts you should know before buying commercial property in Florida. The author is a Florida-licensed attorney who is recognized by the Florida Bar as an expert in business litigation law, which includes commercial real estate litigation. This article is not meant to provide legal advice or to form an attorney-client relationship; it is meant only to provide general information about this topic. As you read on, it is important to recognize that each situation is factually distinct, thus the best recommendation is to consult with a qualified Florida-licensed attorney in the preliminary stages of any contemplated transaction.
The most striking contrast between commercial and residential real estate transactions in Florida is that the landmark 1985 Florida Supreme Court decision of Johnson versus Davis does not apply to commercial real estate transactions. In other words, the concept of caveat emptor or buyer beware is alive and well in non-residential real estate transactions in Florida. This is so because purchasers of commercial property are deemed and looked upon as sophisticated investors, capable of and knowledgeable about performing substantial due diligence.
The legal burdens placed on commercial property buyers to compile information they deem relevant and important and the rising cost of litigation in these transactions highlight the importance of substantial and thorough pre-closing due diligence. Part of this due diligence should be the thorough documentation of the transaction. Maintaining proper and complete documentation of communications and information provided by the seller and to third-parties can alleviate confusion in the transaction and potentially reduce the discovery necessary in subsequent litigation to reduce some of the costs and expenses associated therewith.
In residential transactions much of the post-closing litigation focuses on the failure of a seller to disclose material, unobservable defects that were actually known to the seller. In commercial transactions, however, litigation can address a broader range of representations upon which the buyer relied as well as performance failures in the transaction. These performance failures may include contractual obligations and title issues, as well as the extent, operation, and impact of contractual waiver provisions.
There are also many concerns that arise in non-residential transactions that may not arise in residential deals, such a environmental impacts, property taxes, community impact fees, and development planning. These concerns require the assistance and skills of qualified professionals. For example, while the buyer of a home or his inspector may be capable of spotting most defects during a simple walk-thru investigation, a different degree of expertise and experience is required to perform proper and thorough evaluations of the physical and non-physical issues concerning commercial property.
There are a great number of experienced and qualified professionals in Florida that offer these services for commercial property transactions. Knowing what services are appropriate to a particular transaction and to whom to turn is where the skills of a real estate attorney with experience in commercial transactions is particularly helpful. Employing these professionals to perform required pre-closing due diligence is one method of attempting to avoid post-closing litigation and can be beneficial even in the negotiations for the transaction.
The Florida Bar distinguishes those attorneys that have demonstrated their experience and expertise in the areas of real estate, construction, and commercial/business litigation with the recognition of Board Certification. You can obtain a list of Board Certified attorneys from the Florida Bar at www.flabar.org. You can also contact the local voluntary Bar for the County in which the property is located for a referral.