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Commercial Real Estate Attorneys in Lafayette, Louisiana
According to the website GeoData Plus, there are 148,116 commercial properties in Louisiana, far outnumbered by 2,341,674 residential properties. While buying or selling a home is often a fairly straightforward proposition, commercial real estate transactions present many more challenges.
Dealing with commercial properties is subject to considerations that don’t exist for residential properties, and the steps involved in ensuring that all these considerations are met before buying a building represent one important difference.
Another is, of course, that the sums involved are greater, and financing is more restrictive. On a residential property, you can get a 30-year loan from a local mortgage lender or bank that is guaranteed by the federal government. When you set out to buy a warehouse, your financing options might be limited to short-term loans. There might even be a balloon payment at the 10-year mark.
If you’re looking to buy or sell commercial real estate property in or around Lafayette, Louisiana, contact the commercial real estate attorneys at J. Clay LeJeune, Attorney at Law, LLC. We will work closely with you on every step of the transaction to make sure your rights are protected and that the transaction goes through cleanly to a conclusion.
We proudly serve clients in Iberia, St. Martin, Jefferson Davis, St. Landry, and Acadia, Louisiana.
Turn to legal assistance to ensure you’re taking the correct steps.
What Is Considered Commercial Real Estate?
Commercial real estate (CRE) is designed as a workspace rather than a living space. Another way to look at CRE is that it has the potential to generate profits. In this sense, the property could be a residential duplex, but more generally, CRE is considered to consist of structures for office space, hotels, restaurants, healthcare facilities, markets, shopping centers, and the like.
Laws and Regulations Affecting Commercial Real Estate
Zoning, of course, is a primary consideration. If you are looking to construct a shopping center, warehouse, or any commercial structure, you have to make sure that the area you’re considering building on is zoned for that type of use. The same can apply when you’re looking to buy a commercial structure.
Say you find a vacant warehouse for sale that you think could be repurposed as an office building, you would need to check the zoning restrictions in that area. You can, of course, apply for rezoning, but that is no doubt going to be a lengthy process.
An appraisal is also another important aspect of a commercial property transaction. The seller may set one price, but the true market value may be lower. If you’re looking to buy, how do you make sure you’re paying a fair price?
Depending on the property, you can use one of three methods to determine a property’s value: capitalization/cap rate, comparison, and replacement. Capitalization/cap rate arrives at a value based on what the real estate generates in lease and rental revenues, minus expenses. Comparison is just that – comparing properties in similar size, condition, and general location. Replacement means determining what it would cost to replace the property.
Disclosure is another area of concern. Sellers of homes in Louisiana are required to present buyers with a disclosure document detailing any defects or unsafe or unhealthy conditions in the home. CRE sellers likewise should be held to reveal any conditions that affect the use of the structure or might require repair or even violate building or other codes.
Landlord/tenant laws will apply if there are leases or rental agreements in effect or to be in effect. Louisiana laws are designed to protect both tenants and landlords. These agreements must cover the rent/lease amount, length of the occupancy, termination of tenancy, provisions for subleasing (if any), and more. These agreements need to be precisely and carefully crafted to avoid disputes that can fester and end up in litigation.
Insurance is another consideration when buying a commercial property. As the buyer, you’ll want your investment protected should anything happen. While your policy will cover the overall property, if you have lessees such as retail establishments running a business in your building, they too will need to have commercial liability insurance.
Obtaining financing can be more challenging than getting a home loan. Getting a loan from a bank might get you better rates and perhaps a longer term, but bank standards can be high, and the process is time-consuming. Going to a commercial lender is often quicker, with less rigid underwriting standards, but the loan can be short-term, perhaps three to five years, or they may require a balloon payment after ten years.
The real estate purchase contract is often a complex and lengthy document. These contracts are usually prepared by an attorney, but a CRE broker may try to use a standardized or downloadable form to rush the transaction through to the finish. You, as a buyer or seller, really need an experienced commercial real estate attorney to write and review the contract to see that every term and condition is addressed correctly – and that you are protected.
Commercial Real Estate Attorneys Serving Lafayette, Louisiana
You will need an attorney involved in the contract, whether you’re the buyer or seller. Also, you will need to rely on your attorney’s review and input every step of the way to ensure your rights are protected. If you’re looking to buy or sell commercial real estate in Lafayette, Louisiana, contact us at J. Clay LeJeune, Attorney at Law, LLC. We will guide you, so no surprises will be in store when you close the deal.