Commercial real estate investments can generate strong returns, but they also involve significant risk. Conducting thorough due diligence helps investors identify potential issues before purchasing a property. In California, where environmental regulations, zoning rules, and disclosure requirements are complex, careful investigation is essential. Attorneys at SBEMP (Slovak, Baron, Empey, Murphy & Pinkney) law firm provides professional legal advice and services to clients in Palm Springs, Palm Desert, Rancho Mirage, Inland Empire, Orange County, Coachella Valley, and surrounding communities.
Reviewing Property Title and Ownership
The first step in due diligence is reviewing the title report. Investors must verify that the seller has clear ownership and that the property is free from liens, easements, or encumbrances that could impact future use. Title issues can delay transactions or create expensive legal problems if not discovered early.
Conducting Physical Inspections
A physical inspection identifies structural issues, safety concerns, and necessary repairs. This includes examining the building’s foundation, roof, electrical systems, plumbing, and HVAC units. In California, seismic compliance and ADA accessibility standards are also important considerations. These inspections help investors understand true maintenance costs and negotiate repairs or price adjustments.
Evaluating Zoning and Land Use Regulations
Zoning laws determine how a property can be used, expanded, or redeveloped. Investors should review local zoning ordinances, conditional use permits, and any restrictions that may affect their plans. California’s rules related to environmental impact and energy efficiency may also influence development possibilities.
Reviewing Environmental Reports
Environmental reviews are essential, especially for industrial or commercial sites. Phase 1 environmental assessments help determine whether the property may be contaminated with hazardous materials. If concerns arise, a Phase 2 assessment may be required. Failing to identify environmental issues can expose investors to liability under state and federal law.
Analyzing Leases and Tenant Information
Investors purchasing occupied commercial property should review existing leases, rent rolls, and tenant financials. Understanding lease terms, renewal rights, and tenant responsibilities helps determine whether the property will generate stable income. Strong tenants increase property value and reduce financial risk.
Partnering With an Experienced Real Estate Attorney
Proper due diligence reduces risk and strengthens your investment. SBEMP’s real estate attorneys guide investors through every step of the process to ensure compliance, identify risks, and negotiate favorable terms.
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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.