Why You Need a Full-Service Real Estate Practice for Your Commercial Transaction
Commercial real estate transactions are often complex, with multiple moving parts that require skillful management. They also are typically laden with pitfalls that must be anticipated and prevented. Before an organization purchases or leases property, it is paramount that it aligns itself with a real estate attorney who understands the numerous aspects of the transaction – and who can expertly execute the deal to ensure it successfully reaches completion.
A Commercial Deal Is the Sum of Many Parts
Commercial real estate deals, no matter how straightforward, are multifaceted. Many law firms and attorneys only handle specific aspects of a transaction, such as negotiating the terms of the lease or sale, lending, land use and zoning, or environmental issues, which requires clients to hire multiple law firms. But challenges with one segment could have negative implications on the timing and outcome of the entire deal, making communication essential to the success of a project. Lapses in communication between disparate law firms could cause details and deadlines to fall through the cracks.
A full-service real estate and land use practice can more easily partner with clients to achieve their objectives by being able to manage all facets of the transaction with one point of contact, anticipate problems and deliver practical, creative solutions that protect short-term and long-term business goals.
Looking at the Big Picture to Prevent Problems
Before an organization negotiates and signs a contract to buy or lease a commercial property, due diligence must be performed to ensure the transaction will enable it to realize its goals. An attorney with experience in zoning and land use can determine if the property is subject to regulatory or legislative restrictions that would limit the uses or construction.
For instance, if a retailer determines that enlarging its building will be necessary to grow its business, it's important to know upfront whether local laws will permit the desired expansion. Additionally, an attorney with knowledge of all aspects of the transaction can determine if there are issues or problems with the property that would be costly to mitigate, such as hazardous conditions needing abatement or an encumbered title requiring litigation for clearance.
Benefiting from Local Knowledge, Relationships and Multiple Perspectives
It’s vital that a full-service real estate practice have experience in the geographic region of the transaction. An understanding of local laws and regulations and long-standing relationships with local zoning and planning boards are invaluable and can help to navigate and resolve obstacles effectively and efficiently. Additionally, they will have ready access to ancillary support, such as engineers, surveyors, etc.
Similarly, a law firm that has established relationships with lenders in the region will have an advantage when seeking financing options for its client. Finally, a law firm that represents multiple parties in transactions – lenders, municipalities, landlords, tenants, sellers, and purchasers – will bring a comprehensive perspective to the handling of the transaction.
Garavel Subaru Consolidates Legal Counsel
Case in point: the development of Garavel Subaru’s new dealership. Garavel Subaru wanted to expand its existing dealership by moving to a new location in Norwalk, Conn. To do so, the automobile dealer was acquiring two vacant lots owned by different entities. The company initially hired FLB Law to handle the land use and zoning portion of the project and another law firm to represent it in the real estate transaction.
But when FLB Law began reviewing the company’s file, the team discovered that one of the parcels of land was embroiled in litigation, which raised critical issues for both transactions. The FLB Law attorneys raised concerns to executives at Garavel Subaru, who then released the transactional law firm and retained FLB Law to assume all aspects of the acquisition, in addition to the initial scope of work: land use and zoning.
Unfortunately, the prior law firm had allowed several due diligence periods in both contracts to lapse, including those that would have allowed Garavel Subaru to terminate its contracts if one of the two deals fell through. The termination clauses were critical as the dealership needed both lots to execute its plan. FLB Law advised its client that even if the due diligence periods had not lapsed, they were far too short for the dealership to obtain the proper municipal approvals.
FLB Law immediately contacted the sellers’ lawyers and negotiated extensions to the due diligence periods, giving Garavel Subaru ample time to get its permits and approvals in order. At the same time, the firm initiated the zoning approval process to keep Garavel on its project schedule and assisted the company with obtaining financing to ensure there would be sufficient funds for the purchase.
As the deal progressed, FLB Law managed all the pieces simultaneously, including successfully representing the company before multiple municipal boards and commissions to obtain proper permitting and zoning approvals. The team also negotiated the pending litigation affecting the one parcel, which resulted in a settlement before closing. The successful settlement allowed both transactions to be finalized and a clean title to be delivered so that Garavel Subaru could proceed with its expansion plans.
Collaboration is Key
While it’s beneficial to retain knowledgeable local counsel who can provide a full breadth of real estate services, selecting an attorney who provides excellent client service and will work within the confines of their clients’ processes is also important.
Eric D. Bernheim, a managing partner at FLB Law in Westport, Conn., is one of Fairfield County’s most sought-after real estate attorneys. He represents local businesses, national hospitality groups, developers, municipalities, lenders, and individuals in transactions of all kinds, including leases, acquisitions, dispositions, and financing, in addition to handling zoning and land use matters. Contact Eric at bernheim@flb.law or 203.635.2200. For more information about FLB Law, click here.