Commercial real estate law governs real estate and commercial transactions, including construction, leasing, and investment. It differs from residential real estate law in that it lacks many consumer protections. Commercial transactions involve more money and complexity, and parties have a higher level of commercial experience. Construction and leasing are the main areas of focus, but other transactions, such as REITs and insurance disputes, also fall under this legal umbrella. Commercial real estate attorneys can help with these matters.
Commercial real estate law is the set of statutes, regulations, and court decisions that primarily deal with real estate and commercial transactions. This type of law includes many of the same subject areas as residential real estate law, such as construction, mortgage and leases, but addresses them strictly in a business context. Because the transactions are commercial, the law governing the actions of the parties involved lacks many of the protections that can be found in consumer-level real estate law.
The law that controls real estate transactions varies according to the jurisdiction in which the property is located. Commercial real estate law generally deals with commercial properties, such as office buildings, shopping malls, and warehouses. The agreements that are made regarding these types of ownership usually take place between businesses. As a result, the amount of money involved and the complexity of the transactions are often much greater than in a residential transaction. Parties to commercial transactions usually have a higher level of commercial experience, so the law does not provide the same types of statutory remedies for errors and misjudgment as it does at the consumer level.
The two things common to commercial real estate law are construction and leasing. Commercial real estate law related to the construction of corporate assets typically involves complex contracts on property structuring, acquisition, original and bridging financing, government approvals, permits and licenses, environmental risks, and the employment of project contractors. While the residential construction process can take 1 to 3 years, a commercial project can take a decade or more to complete.
Commercial leasing is a real estate topic of its own. These types of leases can last for decades and may have variable payment terms that include a fixed fee for using the space plus a sales percentage that must be paid monthly to the landlord. There are no legal protections against overcharging, price hikes, or commercial eviction. The entire relationship is governed by what is contained in writing. Commercial real estate law addresses the circumstances that may arise under the terms of the lease from a contractual perspective.
Construction and leasing make up the bulk of commercial real estate law, but there are other types of transactions as well that would fall under this legal umbrella. Real estate ownership can be used as an investment vehicle for the formation of real estate investment trusts (REITs), and the law surrounding this type of ownership structure is detailed. Commercial property has significant insurance needs and may be subject to coverage disputes if natural disasters, terrorist activity or other types of unforeseen events affect the property. Bankruptcy is always a concern for businesses and commercial real estate can often be tied up in proceedings originating from financial hardships that an owner experiences in other areas of life. A commercial real estate attorney could be hired to deal with any of these matters.
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