Commercial real estate laws are not that easy to wrap your head around. With laws at the federal level, at the state level, and regulations at local levels, getting to understand the regulations that govern commercial real estate can be quite hectic. At the same time, real estate laws encompass everything from insurance law to contract law to property law. As such, there’s no single source where you can find everything that you need to understand real estate laws as a commercial properties investor.
It is, therefore, advisable that you look for professional help when looking to buy or sell commercial properties if you do not want to find yourself on the wrong side of the law – especially if your investment is quite significant. And while it is important to do so, it is advisable that you consider knowing some of these laws to stay informed. Below are five commercial real estate laws that you, as a real estate investor, need to know.
Tennant/Landlord Laws vary from state to state. However, they are designed to safeguard the rights of the parties involved in any leasing or rental agreement. Common clauses found in these laws often govern:
• Necessary disclosures
• Payment of rental fees
• Duration of tenancy
• Rights of privacy
• Rights to termination of tenancy
• And much more
Real estate laws are crafted using fine legal definitions of relationships that exist between the owner of a commercial property and the entity or individual habituating the space. It is, therefore, important to understand some of these laws to ensure that you do not violate any of the stipulated rights.
Disclosure laws vary from state to state and deal with the location, restrictions and conditions placed on a property. These laws generally exist to ensure that renters understand what they are getting into. For example, property owners are required to disclose if there are any known and unknown toxic substances like lead paint, radioactive materials and asbestos. At the same time, they may be required to disclose other less-shocking information; but this will vary from state to state. As a commercial property owner/investor, it is important that you understand these laws – especially if you opt to use a realtor to handle all your rental transactions.
Land Use and Zoning Laws
State or local legislation will often dictate how land use and zoning regulations are enforced. Apart from determining taxation, these laws also determine how a property can be used. These laws can dictate if a property can be used for retailing operations, and in some cases, the sort of retail operations that can take place.
Rental agreements and leases are legally binding contracts that are drafted by one party or another and accepted by both. As such, contracts must be structured in a particular way and contain rigid verbiage that can stand up to challenges. While a majority of contracts in the US fall under the nation’s Uniform Commercial Code, contracts for the sale of real estate fall under the Common Law of Contracts. The Common Law of Contracts is quite different and requires an acceptance to be the exact representation of the terms stipulated before it can be viewed as a legally recognized acceptance. When changes are made to the initial offer, there is no acceptance since the offer has been altered – as a result, it becomes a rejection and opens up room for a counteroffer.
As a commercial real estate investor, it is without a doubt that you want your investment protected/covered, and that is you should consider having insurance on your commercial property. Insurance covers your property in the event an accident occurs. However, most insurance policies only cover your property and not your tenant or a vast majority of their things. As such, they will need to get a policy of their own to ensure that their things on your property are covered and to make sure that they protect themselves against liability lawsuits. Insurance laws vary from state to state and do not possess many overarching federal directives. It is, therefore, essential that you learn more about commercial insurance law to know all there is to know when it comes to insuring your property.
When it comes to commercial real estate law, it is important that you educate yourself on some of the stipulated laws, regulations and codes of contact to ensure that you stay well-informed. Here is a piece of advice, never try to navigate the tricky laws and regulations that govern the buying, selling and leasing of commercial properties on your own – there are just too many variables for a novice to track. Therefore, when it comes to real estate laws, consider hiring a professional to help and guide you through the process.