Buying residential property – somewhere designed for living – is something many people are familiar with, and typically feel fairly confident letting a real-estate agent deal with all the paperwork. But purchasing commercial property – somewhere intended for business – is more complex, involving higher initial investment, greater due-diligence needs, and longer, more complicated purchase agreements. Which is why most experts recommend getting an attorney to assist.

Jenny Spalding is an attorney herself, specializing in estate and elder law as owner of the Spalding Law Office. So she knew she was out of her depth when it came to pursuing ownership of her own office space.

“I opened my practice and had been subleasing a space for the first two years,” Spalding recalls. “I reached a point at which I had outgrown that space – I had added staff, and I wanted a space I could make my own. So I decided to relocate. Commercial real estate isn’t in my legal wheelhouse, so I had to make sure that I wasn’t missing anything and was adequately represented as I approached a purchase agreement.”

With the help of a commercial real-estate broker, Spalding found an office condo that checked all her boxes for infrastructure – it was the perfect size, had a conference room and the right number of offices, and was an end unit with plenty of windows with natural light. The seller provided a purchase agreement for Spalding’s consideration; she contacted colleague Stephen Ringquist to review the contract and make recommendations to safeguard her interests.

“Stephen is a great guy overall,” asserts Spalding. “He’s very knowledgeable, very thorough, is easy to work with, and has integrity. I knew I could depend on him to do excellent work.”

In a commercial real-estate purchase, an attorney can assist the buyer in several ways, such as negotiating on your behalf and ensuring legality, protecting your rights and interests, helping with vendor agreements and document preparation, and reducing risk.

In Jenny Spalding’s case, Stephen Ringquist did all of the above.

“The agreement the seller offered was fairly simple and straightforward for an office building,” Ringquist remembers. “But it was completely seller-biased. It was seriously lacking protections for the buyer, so my job was to deal with this one-sided agreement and balance it out in Jenny’s best interests.”

Ringquist began by adding a long list of required representations and warranties to the purchase agreement. Representations and warranties in a real-estate agreement are statements of fact and promises made by the seller to the buyer.

“There were a lot of protections I added to her agreement that were missing,” affirms Ringquist. “There is always the potential that there could a ton of underlying issues you’re not aware of, things you wouldn’t know just by going through the property. The seller may be aware of them and you’re not, which is why you need reps and warranties.”

 

Among Ringquist’s additions to agreement were items ensuring that:

• the seller had the authority to enter into the purchase agreement and legally sell the property;
• there were no outstanding bankruptcies, liens, tax liens, or construction liens connected with the property;
• there were no breaches or violations by the seller regarding the property or any contracts related to the property;
• there were no notices of violation of building, health, or zoning codes connected with the property;
• the property had no condemnation or environmental issues;
• the property had never had any hazardous waste on it;
• there were no active or planned public-improvement projects that might affect the property;
• all vendor and utility agreements regarding the property could be reassigned to the buyer;
• the seller would remove all their belongings from the property at closing; and
• the buyer’s earnest (downpayment) money would be part of the purchase price, not an additional amount.

“We also made sure to secure all building plans and specifications for Jenny,” Ringquist adds. “She intended to renovate the whole building, so having the plans was a necessity.”

Additionally, Ringquist expanded the available remedies for Spalding should the seller violate any part of the purchase agreement. Remedies are the actions or compensation available if one party doesn’t fulfill their obligations, and can include damages, specific actions, legal costs, or contract termination.

“The only remedy for the buyer included in the original agreement was termination,” notes Ringquist. “Termination means your only solution is not going to closing, which isn’t ideal because you’ve already spent a significant amount doing your due diligence, paying a lawyer, and you might still want the property. So we changed it to include all types of remedies, so that if the seller violated the purchase agreement, Jenny could still close, still get the property, and then sue them for the violation.”

Fortunately, no such remedies were necessary for Jenny Spalding. She successfully closed on the commercial condo, renovated it to her liking, and opened up her new office space within just a few months – thanks in part to Stephen Ringquist’s conscientious additions to the purchase agreement for the property.

“Stephen did a great job,” Spalding concludes. “He covered every detail, explained everything to me along the way, and was very timely with a tight turnaround for the purchase. The success of a substantial transaction like this really comes down to having the right people in your corner, who know what they’re doing, and whom you can count on for professional guidance and advice. Stephen is definitely someone I’d call upon again in the future and refer my clients to, as well.”