Purchasing a commercial property can be a great investment, with the potential to earn you a sustained income now and in the years ahead. However, there are some key legal and financial issues to consider before moving ahead with your purchase. The following are four of these issues:
1. Determining the property’s value
First and foremost, you want to know how much the property is truly worth in terms of both its current and potential value. Location is undoubtedly the most important component to this, although the potential to earn income and the overall condition of the property are also critical. Make sure you know as much as possible about the the property’s value before moving forward with a transaction.
2. Reviewing the title and survey
When considering the purchase of a commercial property, you need to be sure that the title does not include exceptions that could impact how you use the property, such as easements or conditions that allow other individuals or organizations to have access to it. A real estate attorney will review the title and survey, giving you the information you need to determine if there are any exceptions present in the title.
3. Dealing with existing tenants
If the property you are thinking about purchasing already has commercial tenants, you need to decide if you want to become a landlord. In the U.S. Virgin Islands, you must respect the terms of the original lease with all existing tenants. You will not be able to cancel or early terminate the leases without good cause, and you would be responsible for all of the duties of the landlord as stipulated in the leases. This may include options allowing your tenants to renew their leases after their terms are up.
An attorney can help you examine existing leases and determine your obligations under them. This includes reviewing lease conditions, security deposits, existing claims and contributions required of the landlord.
4. Navigating land use issues
In some situations, you may wish to purchase property in order to renovate or convert it at a later date. Before you do, you need to be sure that the various government agencies with oversight for development such as the Department of Planning and Natural Resources, Permit, Comprehensive Planning, and Coastal Zone Management Divisions as well as the Historic Preservation Commissions will approve such actions. Your purchase agreement should include a land use approvals contingency so that you can get the approvals you need, terminating the agreement if you cannot obtain them.
Although these are four of the primary issues you’ll need to consider when purchasing commercial property in the U.S. Virgin Islands, there are a myriad of other matters that may come up during these types of transactions. It’s always helpful to work with a skilled real estate lawyer to guide you through the process.
BoltNagi is a widely respected and established real estate law firm serving individuals and businesses throughout the U.S. Virgin Islands.