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What to look for in a commercial real estate contract

by | Feb 14, 2023 | Real Estate Law

Commercial real estate is a major asset, and both  the buyer and seller can find it challenging and time-consuming to agree on the parameters of the sales contract. Even the smallest word can significantly alter the meaning of a sales condition.

Therefore, it is vital that you build a contract that meets your needs. Below are several issues to look out for when reviewing a commercial real estate contract.

Due diligence

Your contract should designate a specific due diligence period. During this period, you will conduct a title search, environmental study, engineering analysis, zoning review and property survey. You should also review any leases or other contracts on the property.

Covenants and rights

Your contract needs to explicitly state how you can use the property during your due diligence and negotiation periods, including leasing the property, entering into contracts, maintenance and repairs. As the purchaser, you need to carry insurance on the property to cover any damage you or your crew may cause.

Financing and purchase price

The exact price you will pay for the property will need to be explicitly indicated. In addition, you should specify exactly how you plan to finance it. If your financing falls through, you need a clause that allows you to cancel the sales contract.


Warranties give you legal recourse in case something on the property is not provided as promised. Although you will likely property “as is,” you need to clarify this in the contract. If the seller makes any promises concerning the condition, describe these promises in detail in your agreement.

It’s also important to remember a property description, breach remedies, whereas clauses, transfer documents, closing terms and any contingencies you require.