In commercial real estate, conveyancing is the legal process of transferring ownership of a property from one party to another. This procedure involves a thorough examination of property rights, zoning laws and other legal and financial aspects.
While crucial for a smooth transition of ownership, commercial conveyancing can often encounter delays due to its complex nature. Here are some of the most common issues that can drag out the process.
Due diligence issues
Due diligence is a critical phase in commercial property transactions. It involves in-depth investigations of the property, including but not limited to:
- Environmental assessments
- Structural surveys
- Title searches
These processes can uncover unexpected issues, such as contamination, structural defects and boundary disputes. Resolving these problems often requires additional time, negotiations and sometimes even expert intervention.
To mitigate this issue, start the process as early as possible. It is also advisable to set realistic timelines to account for potential problems.
Lease complexities
Commercial properties often come with existing tenants and lease agreements. Reviewing and transferring these leases can be time-consuming. As a buyer, you need to carefully examine each lease to make sure it aligns with your intentions for the property.
Negotiations may be necessary to modify lease terms and, in some cases, existing tenants might have rights that could affect the sale. This is why it is important to request and review lease documents early in the process.
Planning and zoning compliance
Making sure that the property complies with current zoning laws can cause substantial delays, and so does obtaining the necessary permits for its intended use. This is particularly true if you plan to change the property’s use or make significant alterations.
The process may involve:
- Applying for rezoning
- Seeking variances
- Obtaining special use permits
Each of these can require multiple meetings with local planning boards and public hearings. That said, consider working with an attorney knowledgeable in New York’s planning and zoning laws.
Title defects
Discovering issues with the property’s title can often prolong the process. Common title issues include:
- Undisclosed liens
- Easements
- Encroachments
Essentially, these problems and other encumbrances can affect the property’s ownership or use. Fixing these issues often requires legal intervention and can involve negotiations with multiple parties.
Some buyers order a preliminary title search before even making an offer. This way, you can walk away from the deal if there are too many issues with the title. Title issues are also usually addressed in some detail in the contract of sale and you may or may not be protected by those provisions.
These are just some of the problems that can arise during conveyancing. Nevertheless, there are many ways you can prevent them from becoming significant delays.
With proper research, preparation and legal guidance, you can hopefully expedite the process and decrease the risk of other unforeseen circumstances.
