The Importance of Due Diligence in Georgia Commercial Real Estate

Due diligence is a commonly used term in commercial real estate that refers to the process of inspecting, examining, and investigating property to determine its suitability for a particular transaction before closing. This term is also often used in business transactions to describe the process of inspecting, examining, and investigating a business entity prior to a merger, acquisition, buy-out, loan, or other transaction. In Georgia, due diligence should be performed prior to the execution of all commercial real estate transactions. In addition, due to the complexity of commercial real estate transactions, parties should always seek the guidance of experienced legal counsel to help them navigate this process. Below is an overview of the importance of due diligence in Georgia commercial real estate transactions.

Terminology issues

As noted above, Georgia commercial real estate transactions are complex, and this makes due diligence especially important. Adding to this complexity is the variety of specialized commercial real estate terms that aren’t commonly understood outside of the real estate industry. For example, the following terms aren’t widely understood by those outside the industry, but they can have major consequences:

  • Subordination
  • Escalation
  • Triple net lease
  • Tenant improvement allowance
  • Estoppel certificates
  • Demised area
  • CAM charges
  • Base rent

Additional factors

In addition to terminology, there are a number of other factors affecting commercial real estate transactions that make due diligence important, such as:

  • Signage restrictions
  • Parking space allotment
  • Exclusivity provisions
  • Insurance requirements

The failure to perform due diligence can have lasting effects

Due to the complex nature of commercial real estate transactions, without proper due diligence, a party to a transaction can end up bound by a contract that doesn’t serve his or her needs. In addition, commercial real estate agreements often span several years, making it imperative that all parties make sure they understand every aspect of the transaction. Therefore, proper review, negotiation, and preparation of all documents by an experienced Georgia real estate attorney is critical. Finally, most property purchases or lease agreements add value to a Georgia business as either an asset or a liability, making legal guidance imperative during the due diligence period.

Georgia Real Estate Attorneys

Are you planning on purchasing or selling property in Georgia? If so, you should hire an experienced Georgia real estate attorney to assist you with the transaction. At Klosinski Overstreet, LLP, we will assist you with all legal aspects of your residential or commercial real estate transaction. Our Georgia real estate attorneys have experience facilitating the purchase and sale of many types of properties, including single family homes, condominiums, multifamily homes, retail centers, office buildings, hotels, apartment complexes, and vacant property slated for development. Therefore, if you are planning on buying or selling residential or commercial real estate of any kind in the state of Georgia, please contact us as soon as possible for a consultation.

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