Rental Property Investor · Riverwoods IL · Member since 2017 · 4 posts · 0 votes
Hi BP, I am under contract to purchase our first office building, it is fully occupied with 2 tenants. I have asked standard documents through my attorney to the seller's attorney - leases, insurance with any claims in the past years, service contracts, any permit violations, etc during attorney review. My attorney said these documents can be required after attorney review closes. So far, except signed leases, I have not received anything else. My attorney keeps asking about the physical inspection. I'd like to complete the financial inspection first.
What is the difference between attorney review and due diligence? Is this the right attorney for me?
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
7y
@Rui Zhang I would make sure your attorney does commercial real estate as a focus.
Typically once you agree on terms with an LOI you turn that over to your attorney to draft the contract. That's all they do at this point until you satisfy your due diligence period. At that point if you are moving forward the attorney will then proceed with preparing closing documents and title search.
Due diligence is you responsibility . You need to gather all the info from the seller or his agent such as leases, financial documents, do a physical inspection of the property and have a formal inspection if you feel it’s necessary.
The bank will order appraisals.
That’s pretty much it for a small property like this.
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
7y
@Rui Zhang I would make sure your attorney does commercial real estate as a focus.
Typically once you agree on terms with an LOI you turn that over to your attorney to draft the contract. That's all they do at this point until you satisfy your due diligence period. At that point if you are moving forward the attorney will then proceed with preparing closing documents and title search.
Due diligence is you responsibility . You need to gather all the info from the seller or his agent such as leases, financial documents, do a physical inspection of the property and have a formal inspection if you feel it’s necessary.
The bank will order appraisals.
That’s pretty much it for a small property like this.
Rental Property Investor · Riverwoods IL · Member since 2017 · 4 posts · 0 votes
7y
@Greg Dickerson Thanks for reply. We skipped the step with LOI, directly sent purchase contract. Now it is under attorney review and requesting the due diligence documents.
If we start over, we should start with LOI and get all the financial due diligence done, then sign the contract. What is the cause of action now? Ask my attorney to add due diligence requirements and period to the contract?
@Greg Dickerson Thanks for reply. We skipped the step with LOI, directly sent purchase contract. Now it is under attorney review and requesting the due diligence documents.
If we start over, we should start with LOI and get all the financial due diligence done, then sign the contract. What is the cause of action now? Ask my attorney to add due diligence requirements and period to the contract?
Thanks
You don't always have to negin with LOI. Smaller deals skip this step sometimes. I usually request all the documents prior to even making an offer. I was just speaking to your specific situation since you were already under contract. Due diligence is simply verifying all the leases and financial info and doing on site and physical inspections etc.
Attorney · Durham, NC · Member since 2016 · 224 posts · 126 votes
7y
@Rui Zhang Regardless of whether you have a LOI, think of your contract as the roadmap for your transaction. It needs to provide what DD documents/information seller will deliver to you and what due diligence rights you have (ie length of DD period, physical inspections, tenant interviews, environmental testing, etc.)...along with a lot of other terms a competent attorney can assist on