When you want to invest in commercial real estate, you will search for the perfect property. When you find a property that you want to add to your portfolio, you can make an offer to the seller. If the seller accepts, both parties will sign a contract.
A commercial real estate contract is an enforceable agreement between the buyer and the seller. The contract contains some provisions allowing either party to terminate the contract. Otherwise, the buyer and seller have several remedies to compensate for a breach.
Payment for costs
When you sign your purchase agreement, the contract should contain terms that address the situation if either party defaults on the deal. As a buyer, you want to make sure you can recover your deposit and any costs and fees you paid towards the purchase if the seller breaches the contract. As a seller, you will want a provision that allows you to cover any expenses for upgrades or other repairs done at the buyer’s request if the buyer backs out of the contract. A seller can usually include a provision to retain the purchaser’s earnest money deposit in the event of a breach.
If a seller backs out of a contract, the buyer can bring a lawsuit against the seller to request specific performance under the contract. If the buyer were successful, the court would order the seller to fulfill its end of the contract and transfer the property to the buyer under the purchase agreement.
Commercial real estate can be a significant investment, so you want to be sure you can rely on your purchase agreement to protect the transaction.