Commercial real estate can be a powerful investment, but the contracts that govern these transactions are complex and often favor the party that drafts them. For Dallas investors, understanding the fundamentals of commercial real estate contracts is essential to protecting capital, minimizing risk, and ensuring long-term returns. Whether you are purchasing your first commercial property or expanding an existing portfolio, knowing what to look for before signing is critical. Attorneys Marc Empey and Shaun Murphy at SBEMP (Slovak, Baron, Empey, Murphy & Pinkney) law firm provides professional legal advice and services to clients in Dallas.
How Commercial Contracts Differ From Residential Agreements
Commercial real estate contracts are significantly more detailed than residential contracts. Unlike residential deals, commercial transactions offer fewer statutory protections and rely heavily on negotiated terms. Buyers are often expected to perform extensive due diligence and assume greater responsibility for identifying risks.
In Dallas, commercial contracts frequently include custom provisions tailored to the property type, zoning, and intended use. This makes careful review especially important.
Key Contract Provisions Investors Should Understand
Several sections of a commercial real estate contract carry substantial legal and financial implications.
Property Description and Permitted Use
The contract should clearly identify the property boundaries, access rights, easements, and permitted uses. Investors must confirm that zoning and use restrictions allow their intended business or tenant operations.
Purchase Price and Earnest Money
Contracts outline the purchase price, deposit requirements, and conditions under which earnest money may be refunded or forfeited. Understanding these terms helps investors manage risk if the transaction does not proceed.
Due Diligence Period
The due diligence phase allows buyers to inspect the property, review leases, assess environmental concerns, and verify compliance with local regulations. Dallas investors should ensure the contract provides adequate time and termination rights if issues arise.
Representations and Warranties
These are statements made by the seller about the condition of the property, existing leases, litigation, and compliance matters. Well-drafted representations help protect buyers from undisclosed liabilities.
Financing and Contingencies
Most commercial purchases involve third-party financing. Contracts should include financing contingencies that allow the buyer to exit the transaction if acceptable loan terms cannot be secured. Investors should also review appraisal requirements, lender deadlines, and closing conditions carefully.
Default and Termination Rights
Default provisions explain what happens if either party fails to meet contractual obligations. These clauses define notice requirements, cure periods, and available remedies. Investors should understand their exit options if the deal becomes unfavorable.
Why Dallas Investors Need Legal Review
Commercial real estate contracts often include legal language that can shift risk in subtle ways. A Dallas real estate attorney understands local market practices, Texas contract law, and zoning regulations that affect enforceability. Legal review helps investors avoid costly mistakes and ensures the contract aligns with their investment strategy.
Have any legal questions? Contact the Attorneys at SBEMP Law Firm:
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SBEMP LLP is a full service law firm with attorney offices in Palm Springs (Palm Desert, Inland Empire, Rancho Mirage, Indian Wells), CA; Indian Wells, CA; Costa Mesa (Orange County), CA; San Diego, CA; New Jersey, NJ; and New York, NY.
DISCLAIMER: This blog post does not constitute legal advice, and no attorney-client relationship is formed by reading it. This blog post may be considered ATTORNEY ADVERTISING in some states. Prior results do not guarantee a similar outcome. Additional facts or future developments may affect subjects contained within this blog post. Before acting or relying upon any information within this newsletter, seek the advice of an attorney.