All Forum Posts by: Ryan Briggs

Hi all,

I am a real estate and corporate transactional attorney. Just wanted to pass along a short article I recently posted on legal red flags to look for in commercial real estate deals. 

Commercial real estate deals move quickly, but that doesn’t mean you should rush through the fine print. An experienced legal advisor can help you surface issues before they become liabilities.

Here are some of the most common legal issues I see arise in commercial real estate deals.

Unclear or Clouded Title

Issues like old liens, unrecorded easements, unresolved probate claims, or missing releases can kill momentum fast. Always insist on a full title commitment and conduct a legal title review, not just a policy review by the title company. Pay particular attention to:
- Blanket easements
- Unreleased deeds of trust
- Mechanic’s liens or litigation pending

Zoning and Use Conflicts

Don’t assume current or intended use is compliant. Zoning restrictions and special use permits vary widely and change over time. A "grandfathered" use may not transfer, and conditional approvals may expire.
Tip: Have zoning verified in writing and confirm any change-of-use or development plans with the local planning department before closing.

Ambiguous Lease or Tenant Obligations

If you're buying an income-producing property, tenant leases are your revenue stream. Leases with inconsistent terms, missing exhibits, or tenant improvement obligations that aren’t documented can lead to disputes or rent shortfalls.

Look for:
- Verbal side agreements or concessions
- Unsecured security deposits
- Unrecorded tenant options or rights of first refusal

Inadequate Entity Structuring

Using the wrong entity or failing to document internal ownership or authority can create tax exposure, personal liability, or future conflict among investors. It’s not just about forming an LLC — it’s about how it’s formed and governed.
Ensure:
- Proper operating agreements
- Signatory authority is clearly documented
- Investors’ contributions and rights are legally memorialized

Financing Terms That Outpace the Legal Review

Lenders are moving faster than ever — but moving too fast can be risky. Ensure the loan documents reflect what was promised in the term sheet, including prepayment rights, carve-outs, and guarantees.
Pay attention to:
- Hidden covenants
- Personal recourse carve-outs (“bad boy” provisions)
- Cross-collateralization language across unrelated properties

Environmental Exposure

Phase I reports often raise “recognized environmental conditions” (RECs), but buyers ignore them at their peril. Even if contamination was caused by a prior user, liability can still fall on you under CERCLA or similar state laws.
Get legal advice on:
- Scope of further testing (Phase II)
- Escrow holdbacks or indemnities
- Insurance alternatives if risk can't be fully resolved pre-closing

Wrapping Up: Don’t Only Rely on the Broker or Title Company

A solid legal review isn’t just a formality — it’s a deal-protecting strategy.

Reach out and let's talk through any questions or concerns.

@Jason Campbell thanks so much for these recommendations! I'll be taking a look at those areas. 

@Mitch Davidson I appreciate the information very much. I grew up in Mooresville and spent a good amount of time on the coast, but western NC is an area I'm not very familiar with. I'll take a look and would love to connect sometime in the future. 

Thanks for the response @Ace Kaspar, I actually grew up in Mooresville and have lived in the Charlotte area and the coast (Wilmington) as well. I would love to set up a time to talk at some point. 

Thanks @Mack Lengel I will keep him in mind. 

@Brandon Vanderford great to meet you and thank you for reaching out. I'll keep you in mind as I move forward. I am definitely interested in Raleigh-Durham. 

@Ben Einspahr

Solid question. I am actually looking in Colorado as well and networking locally. I plan to do so as well on BP, but haven’t begun that thread yet. I am from NC and am interested investing out there for that reason, but definitely good advice on the management fees. 

Greetings! I am a new wannabe investor (i.e., with no deals yet) with a solid financial and legal background (I am a real estate finance attorney licensed in both CO and NC). I would love to connect with individuals investing in North and South Carolina to find out more about their experiences. I am interested in many areas of RE, including, mid-term rentals, storage units, and multi-family.