When buying, selling, developing, or redeveloping a piece of real property in Washington State, the nature of the property can have various implications not only with regard to the financial aspects of the deal or project but with regard to its legal implications as well. This is important to keep in mind from the outset, as there are several steps that can be taken throughout the process to address legal risks, overcome legal hurdles, and avoid unnecessary legal challenges.
Types of Commercial Real Estate and Their Legal Implications
Broadly speaking, the various types of commercial properties can be broken down into 10 categories. These are:
- Utility and Transportation
- Sports and Entertainment
- Vacant Land
- Special Purpose
Multifamily properties include condominium buildings and apartment complexes, as well as smaller rental properties such as townhouse units and duplexes. When seeking to acquire, develop, or renovate a multifamily property, thorough legal due diligence is essential, as it is necessary not only to ensure the clear title, but to address any potential issues related to liens, easements, tenant or unit owner rights, and tenant or unit owner litigation as well.
Retail properties run the gamut from stand-alone boutiques and coffee shops to malls and outdoor shopping plazas. Here, too, thorough legal due diligence is essential (and this will be a theme throughout this article), and reviewing the terms of any existing leases will be particularly important.
Hotels, motels, RV parks, casinos, and other hospitality properties are subject to numerous complex legal and regulatory requirements. Developing and renovating these types of properties requires extensive planning, and it is important to work with legal counsel throughout the planning process in order to ensure that all pertinent legal issues can be timely addressed.
While office properties can provide significant revenue potential, developing and managing commercial office properties present a multitude of legal challenges as well. Depending on where an office building is located, legal and regulatory requirements can vary dramatically. For all office properties, ensuring that business tenants’ commercial leases contain all necessary legal protections is of utmost importance.
Mixed-use properties can combine any or all of the above types of commercial real estate assets under a single roof. Beyond regulatory approvals, mixed-use properties entail the various legal risks and challenges involved with each subtype of property housed within the asset. In addition to addressing the full scope of the legal issues involved with due diligence, acquisition, development, and construction, mixed-use property owners must be sure to comprehensively address the contractual and tort liability risks associated with the various uses of these properties as well.
The legal risks and challenges associated with acquiring and developing industrial real estate depend heavily on the specific industrial use that is contemplated. For example, manufacturing facilities are very different from storage facilities, pipelines are very different from processing and distribution facilities, and so on. While many of these differences have to do with how the property is used, they can also implicate varying regulatory and legal requirements during development and construction.
7. Utility and Transportation
Utility and transportation properties are subject not only to the legal requirements and risks inherent in owning and developing commercial real estate, but to those that apply to their specific regulated uses as well. Environmental compliance, for example, is often a key consideration, and prospective purchasers and developers must have a clear understanding of the compliance challenges and costs they will encounter in order to make informed decisions about whether to move forward (and, if so, on what terms).
8. Sports and Entertainment
Similar to industrial, utility, and transportation venues, sports and entertainment venues present various unique legal considerations for both new and existing owners. From regulatory approvals and construction contract terms to securing tax incentives and negotiating tenant leases, all aspects of developing and owning sports and entertainment venues in Washington State require the advice and insights of experienced commercial real estate counsel.
9. Vacant Land
While selling or acquiring vacant land might seem like the most straightforward of all commercial real estate transactions, this is not necessarily the case. Liens, easements, title disputes, boundary disputes, adverse possession claims, and a multitude of other issues can all present challenges for both parties to proposed vacant land transactions. When it comes to developing vacant land, the legal issues involved depend on both the location of the property and its intended use, and they can range from fairly straightforward to inordinately complex.
10. Special Purpose
Other types of commercial real estate assets are broadly characterized as “special purpose” properties. This terminology does not have any particular meaning from a legal perspective, but rather is simply used as a catch-all for properties that do not fall into any of the other categories discussed above. Similar to vacant land, the legal issues involved in a special purpose property’s acquisition, development, and use will be entirely dependent upon the nature of the property and the specific jurisdiction where it is located in Washington State.
Assessing and Overcoming the Legal Challenges Associated with Commercial Real Estate Acquisition, Development, and Leasing in Washington State
Regardless of the nature of a piece of commercial real estate and its intended use, all parties involved in the sale, development, and leasing of the property need to have a clear and comprehensive understanding of the legal risks, issues, and challenges involved. By addressing these risks, issues, and challenges proactively – before they lead to disputes or litigation – parties can avoid unnecessary costs and delays, and they can move forward with their commercial real estate endeavors with confidence.
Consult with a Trusted Lawyer at Bolan Law Group.
Do you have questions about buying, selling, developing, or leasing a commercial property in Washington State? If so, we encourage you to speak with one of our attorneys. To schedule a confidential consultation at Bolan Law Group., please call us directly or inquire online today.