Q: I own a small business on the South Shore, and we currently rent our space. With rent on the rise, we were thinking about securing a loan and purchasing a commercial property. What are some of the legal implications we should consider?
A: Initially, the most important three words of advice are “financial due diligence.” Make sure you thoroughly evaluate all of the costs of ownership, including taxes [and increases over time], utilities, insurance, capital improvement funding [roof, structure, boiler, HVAC system] and of course mortgage loan obligation. After adding all of these [and other items] and evaluating them with an accountant experienced in real estate ownership, who will also advise you of the tax benefits [depreciation, real estate tax and mortgage interest deductions], you can then make an informed evaluation and decision on which works better all things considered. Then, retain a lawyer to either review the lease or contract of sale.
Click here to view other ‘Ask the Lawyer’ Q&A prepared by Meyer Suozzi attorneys.
