Investing in commercial real estate has both risks and rewards and no investor, agent or realtor wants to spend money purchasing a commercial business or property only to find out later it has expensive defects requiring immediate fixes. As a buyer, how can you ensure the commercial real estate you are purchasing is in good condition? This is where understanding commercial real estate laws/statutes in Illinois and seller’s disclosures come into play.
The Illinois Residential Real Property Disclosure Act (a statute)requires sellers of residential real estate to disclose the property’s condition. In most residential real estate transactions, a standard form includes specific disclosures for the condition of many aspects of the home. However, this statute does NOT apply to commercial real estate transactions in Illinois. Sellers of commercial real estate do NOT have to make the same disclosures as residential sellers. However, there are other ways in which commercial real estate buyers can be protected in the process. An experienced commercial real estate broker like at Joseph & Camper Commercial, Peoria, IL can help commercial real estate investors navigate the purchase process.
When investing in commercial real estate, a seller is bound by the disclosures they make during the negotiation and sale process. Disclosures made during the negotiation and sale process includes any affirmative representation or warranty they make about the property’s condition. While there may be no official duty to disclose, a seller is bound by disclosures they do make and by the terms of the purchase agreement.
An experienced commercial real estate broker can assist a seller in making necessary disclosures to avoid future liability and can ensure a buyer does their due diligence and asks the right questions to elicit the necessary disclosures. An attorney can also be enlisted to craft an explicit purchase agreement that details the condition of the property and any representations relied upon by either party.
A visual inspection of the property will not always reveal defects, so a buyer should ensure a licensed professional perform all inspections needed to determine the building’s condition and quality. After a thorough inspection, a buyer should develop a list of questions to ask the seller related to the property’s condition. Since any affirmative representation seller makes binds them, if they lie, they can be held liable and if they make material misrepresentations, they can be held liable for that as well.
Importantly, if buyer never has the inspection completed and asks about a specific issue that becomes apparent after the transaction is completed, then seller is not liable for anything. An experienced real estate broker or attorney can help you come up with the right questions. Additionally, since the terms of the purchase agreement also bind a seller, it is essential to include any seller representations or warranties in the written purchase agreement, making it easier to hold the seller accountable.
Investing in commercial real estate is a great way to earn income and build wealth. Understanding the lack of commercial property disclosure laws/statutes in Illinois and how to ask the right questions is key. The experienced team at Joseph &Camper Commercial can help and is ready with a wide range of services, including presenting you with businesses and properties for sale in the greater Peoria, Il area. Contact us today or call 309.691.5919.
5001 N. University St., Suite 201A, Peoria, IL 61614
Phone 309.691.5919 | josephcamper@gmail.com
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