Pennsylvania bank-watchers report weak commercial real estate lending
A recent report published in The Philadelphia Inquirer and on Philly.com noted that loan growth for businesses in Pennsylvania was “somewhat disappointing” in the first quarter of 2014. The reports describe a decrease in the amount of commercial real estate loans due to “weak demand.”
If this data is supported, this weak demand in the commercial market could serve as a catalyst for those considering a commercial real estate transaction. It may be a good time to move forward, since a smaller number of businesses are requesting these loans. As a result, there may be less competition in the market.
Red flags to be wary of in commercial real estate transactions
Those that choose to move forward with a transaction should do so carefully. There are some actions that should automatically raise a red flag. One is the use of a boilerplate lease or contract for sale agreement. Each contract should be designed with a particular transaction in mind. If a boilerplate document is used, it may be wise to add a rider or additional document. This document could include a variety of provisions that would serve to adjust the pre-written form so that it is custom fit for the transaction at hand.
It is also wise to conduct a thorough environmental due diligence investigation. Any push back on this request from a seller is a red flag. Once an acquisition is complete, the new owner will likely be liable for any environmental violations that may exist on the property. This can lead to fees and required clean-up costs, which can be very expensive. One way to help mitigate possible liability is to include a provision in the contract which would require a civil engineer to sign off on any potential previous environmental impact issue.
Legal counsel can help
These are just a few of the issues that can arise during a commercial real estate transaction. As a result, businesses that are considering moving forward with these negotiations can benefit from the use of an experienced attorney. This legal professional can help:
- Review a lease or purchase agreement to help better ensure it is structured to the benefit of your business.
- Help ensure the landlord or seller not only delivers the property as outlined in the documents but also meets all other obligations outlined in a lease or purchase contract.
- Discuss potential tax laws connected to the transaction and how they could impact your business.
These are just a few examples that are relevant to a transaction structured for your benefit. Ultimately, an experienced Pennsylvania commercial real estate attorney can provide guidance through the entire process and help better ensure that the path chosen is best for your business’ interests.