Buying or selling commercial property is often a key financial transaction for both businesses and individuals. Whether you're a long-time investor or a first-time seller, the process can feel overwhelming, especially when legal requirements, contracts, deadlines, and money are all on the line.
These types of transactions carry weight, and it's normal to feel cautious or even a little unsure. After all, commercial real estate deals aren't just about signing papers; they're about protecting your investments, your business, and your future.
At Checkett, Pauly, Bay & Morgan, LLC, our real estate attorneys strive to help clients across Southwest Missouri with every legal step involved in buying or selling commercial property. Our goal is to make the process smoother and more secure by guiding you through the essential legal actions you need to take.
Whether you're purchasing a strip mall, office building, warehouse, or vacant commercial land, being well-prepared legally is critical to making a sound investment—or walking away from a bad one. For both buying and selling, it's essential to understand the steps you should take so you can avoid potential disputes, delays, or legal trouble after closing.
Step 1: Conduct Due Diligence Early
Whether you're buying or selling, you should gather all necessary information about the property before signing any contract. This part of the process can reveal potential issues or confirm that the deal is solid. While buyers are usually more focused on due diligence, sellers should also prepare in advance to avoid last-minute surprises.
As a buyer, be sure to investigate the physical property as well as the legal, financial, and zoning history. As a seller, review your own records and correct any potential red flags that may hold up the deal. Some key due diligence steps include:
Title search: Confirm the legal ownership of the property and check for liens, easements, or encroachments.
Zoning verification: Make sure the intended use complies with local zoning ordinances.
Environmental assessments: Identify potential contamination or hazards, especially with industrial or undeveloped land.
Financial records: Review rent rolls, existing leases, tax records, and operating expenses if the property is income-producing.
Survey and boundaries: Validate the legal description and identify any disputes over property lines.
By conducting a thorough investigation upfront with the help of an experienced real estate attorney, buyers can avoid purchasing property with hidden liabilities and sellers can show transparency that can make their property more attractive.
Step 2: Draft a Letter of Intent (LOI)
A letter of intent (LOI) isn’t always required, but it’s a helpful document that outlines the key terms of the transaction before drafting the final purchase agreement. It’s typically non-binding, but it sets expectations for both parties and can save time later.
This document is often the first step in getting everyone on the same page. It provides a structure for the purchase agreement and helps identify early deal-breakers. Some key items to include in a letter of intent include:
Purchase price and financing terms: Include cash offers, financing conditions, or seller financing opportunities.
Property description: Detail what is included in the sale, including land, structures, fixtures, and other relevant items.
Timing: Lay out deadlines for inspections, contract execution, and closing.
Contingencies: Clarify any conditions that must be met before finalizing the deal.
Access for inspections: Confirm the buyer’s ability to inspect the property before closing.
Once both parties sign a letter of intent, the process can move forward with a better understanding of the expectations. While a letter of intent doesn’t replace a full purchase agreement, it does make the next steps easier and more organized.
Step 3: Prepare and Review the Purchase Agreement Carefully
The purchase agreement is the binding contract that outlines every detail of the transaction. Whether you’re buying or selling, it’s critical to make sure this document is accurate. This is where an experienced attorney can offer valuable legal insight by helping you draft, review, and negotiate the terms so you’re not left exposed to risk.
These contracts can be lengthy and include particular language that can impact your rights. It’s important not to sign anything until every term is reviewed and understood. The key important elements to include in the purchase agreement include:
Purchase price and payment terms: Clearly define the amount and how it will be paid.
Contingencies and conditions: These may include financing, zoning approval, or inspections.
Representations and warranties: Statements made by both parties about the property’s condition, title, and compliance.
Closing date and obligations: Specify the date and method of closing, as well as the required documents.
Default and remedies: Detail what happens if either party doesn’t follow through on their contracted obligations.
At our firm, we work closely with our clients to tailor purchase agreements to their needs and goals while minimizing exposure to future legal issues. A well-written agreement helps set the stage for a successful transaction.
Step 4: Resolve Title and Survey Issues
Title and boundary problems can derail even the most promising commercial real estate deals. That’s why title and survey reviews are an essential part of the legal process.
Buyers should make sure they’re getting clean, marketable title to the property and sellers should take care of any outstanding issues before selling, so they don’t hold up closing. Some common title and survey concerns you should address include the following.
Outstanding liens or judgments: These must be cleared before closing.
Easements: Shared access or utility rights can affect how the property is used.
Encroachments: If a neighbor’s structure crosses a boundary, it can lead to disputes.
Legal description accuracy: Make sure the land records match the actual property.
Access and right of way: Confirm that legal access is available and properly recorded.
As experienced real estate attorneys, we help our clients work with title companies, resolve title defects, and interpret surveys so the property is legally ready for transfer.
Step 5: Coordinate With Lenders and Financing
For many buyers, financing is a crucial part of the transaction. Working with banks or private lenders brings a separate set of legal requirements that must be coordinated with the purchase process.
Sellers also need to be aware of how financing impacts closing timelines and may need to cooperate with lender inspections or document requests. Some of the key steps you should take when financing is involved include:
Loan commitment letter: Secure written confirmation of the loan terms and approval.
Review loan documents: These may include promissory notes, deeds of trust, and personal guarantees.
Lender due diligence: The lender may request property information, appraisals, or inspections.
Coordination with closing: All documents must be signed and funds transferred in accordance with both the purchase agreement and loan documents.
At our firm, we help buyers understand their legal obligations under financing agreements and help sellers avoid unnecessary delays due to financing conditions.
Step 6: Handle Closing and Transfer of Ownership
Closing is the final step where funds are transferred, documents are signed, and ownership changes hands. However, it’s not just a formality; it’s a legally sensitive event where mistakes can have long-term consequences.
Both parties should prepare well in advance and understand what documents and steps are required on closing day. Some of the typical tasks and documents involved in closing include:
Deed preparation and execution: The seller signs over the property to the buyer.
Bill of sale: This document transfers any personal property or equipment included in the sale.
Closing statement: This document details all payments, fees, and prorations.
Settlement agent coordination: A title company or experienced attorney will typically handle the closing process.
Final inspections or walk-through: Final inspections can confirm that the property is in the agreed-upon condition.
At Checkett, Pauly, Bay & Morgan, LLC, we assist our clients in reviewing and preparing these documents, coordinating with title companies and agents, and making sure nothing is overlooked.
Step 7: Post-Closing Obligations
Once you close on a property, it doesn't necessarily mean everything is finished. Both buyers and sellers may have post-closing obligations that require legal attention. It’s smart to prepare for these in advance and make sure they’re clearly spelled out in the purchase agreement or separate contracts. Some common post-closing obligations to consider include the following.
Lease assignments or terminations: If tenants are involved, their leases must be transferred or appropriately ended.
Property tax responsibilities: Clarify who pays what, especially if closing occurs mid-year.
Utility transfers: Make sure all utility accounts are switched over smoothly.
Ongoing warranties or repairs: If the seller agrees to post-closing maintenance, they should be documented and tracked.
Recordation of deed: This must be filed with the county to complete the legal transfer.
At Checkett, Pauly, Bay & Morgan, LLC, we help our clients stay on top of these final steps so there are no legal surprises after the deal is done. Contact us today to schedule a consultation.
Reach Out to an Experienced Real Estate Attorney
Whether you're buying or selling commercial property, having legal guidance can help protect your interests and give you peace of mind. These transactions involve more than just paperwork; they involve real financial risk, regulatory obligations, and long-term consequences.
At Checkett, Pauly, Bay & Morgan, LLC, we support clients throughout Carthage and Nevada, Missouri, and the greater Southwest Missouri area with their commercial real estate transactions. From due diligence to closing day and beyond, we’re here to help with every legal step. Reach out to our real estate attorneys today to schedule a consultation and discuss your goals.
