When you look for an attorney in a real estate transaction, make sure you have someone who understands the law, the legal impact and consequences of decisions that are made or documents that are drafted. But also find someone who pays attention to detail, either the attorney or the attorney and his team. There is so much detail in a commercial real estate transaction that has to be contemplated. And from the legal side, there’s a lot there that needs to be analyzed.
Give you just a brief example from something last week —
Client’s selling a commercial condo. It’s an interesting condominium, commercial condominium. He had his office there for a while. Sort of in like a little office park. That development has a commercial condominium association, so the association has various rights. In that particular condo, the association has the right to approve new owners. As part of the documents that we send out to the association to get this transaction done, we send out what’s called an estoppel. We’re asking the condo association, “Are all of the assessments and fees paid, are there any rights of first refusal, options to purchase the property?”
What’s interesting here is that condo the association had the right to approve the new buyer (which they did) but in our condo estoppel letter they sent back to us, they had erroneously marked a box or a question that they have an option or a right of first refusal on the actual condominium unit.
In other words, taken literally, they have the right to buy that condo before it is sold to anyone else. And that’s not uncommon, you see that here and there in different condominiums throughout Florida. Sometimes in the documents that are of record it will even establish an exact price or a formula that the association can use to buy it back.
Sometimes those rights are for the benefit of the original developer but, in any event, you can understand the concern there if someone buys that condominium unit, but then potentially has bought it subject to someone else’s right to buy it, at potentially a different lower price. That has all kinds of implications for the seller, under the contract, for the title insurer, for the title insurance policy for us as an agent issuing that policy, and for the buyer.
There is so much detail in a commercial real estate transaction that has to be contemplated. And from the legal side, there’s a lot there that needs to be analyzed.
Basically you don’t want to buy that mess. So just by reviewing that estoppel… Now that’s something that is sometimes meticulous. I would rather have someone else do that because 9 out of 10 estoppels say the same thing. But by flagging that we were able to get back to the association in time, they corrected it, and we’re good to go.
But without doing that and paying attention to that detail, it could have been an issue in the future.
– Spencer R. Munns is an experienced real estate attorney and shareholder with the law firm of Bogin, Munns, & Munns, a full service law firm with offices in Orlando, Clermont, Kissimmee, Orange City, Daytona Beach, Ocala, Melbourne, Gainesville, and Leesburg, Florida. He welcomes questions and comments regarding the above and can be reached at [email protected].
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