How to Prevent Liability Surprises When Purchasing Commercial Real Estate in Ohio
Commercial real estate may be one of the best investments you can ever make. However, buying commercial real estate in Ohio’s Miami Valley — or anywhere, for that matter — can be complex, even for the pros. It takes time, research, and planning. It can be a wise investment, and the potential rewards can be great. However, there are risks.
Tips for Purchasing Commercial Real Estate in Dayton
Some questions to consider when purchasing a commercial property include:
- What kind of property are you looking for?
- Is it for your own business, to rent out, or to build equity?
- What location would be ideal?
- What risk are you willing to take?
- Are you willing to put in the due diligence it will take to make a sound decision?
Environmental Due Diligence Examples
The Importance of Environmental Studies
There are environmental considerations and risks for commercial property buyers. Environmental contamination is one potential downside that buyers must consider as part of a balanced and comprehensive risk management strategy. Without proper due diligence, environmental liability surprises have the potential to be catastrophic.
Potential environmental risk lies not only within the commercial structure and but also on the parcel of land the commercial structure occupies. Environmental due diligence includes both.
- Phase I Environmental Site Assessment for Dayton Commercial Properties
A Phase I Environmental Site Assessment (ESA I) is an investigation into the past and current uses of a commercial or industrial property. Phase I ESAs are an important protection from legal liability when purchasing a property with environmental contamination. Consequentially, Phase I ESAs are critical in commercial and industrial real estate transactions.
If a commercial or industrial property is purchased without a Phase I ESA and the property has environmental problems, the new owner will likely become responsible for those problems. It is important to remember that remediating and managing environmental problems add significant costs and can be complicated.
- Asbestos Survey
Asbestos is a material that has been used in building materials for years. It has many beneficial characteristics. However, it is a dangerous carcinogen especially if it is airborne and is inhaled. Consequentially, it is important to know if there is asbestos in the commercial building you are considering purchasing. However an Asbestos Survey is not a part of a Phase I ESA.
It is also important to know where the asbestos is and what condition it is in. The Asbestos Survey is an investigation of the structure conducted by a licensed professional to determine where the asbestos is and its condition. If it is in good condition and it will not be disturbed it is not necessary to remove it. In this case, the asbestos will be important to manage, by adopting a rigorous Operations and Maintenance program.
If the asbestos is not in good condition, or if the building is going to be renovated or even demolished then it must be remediated by a licensed remediator. Removing the asbestos is a painstaking job that involves isolating the affected area with plastic draping, watering it down so it won’t become airborne, scraping off the asbestos material in the affected area, such as pipes, bagging the asbestos debris and hauling it to specially designated dumps. Removal of asbestos can be expensive. These costs are often factored into the sale transaction.
The upside of owning commercial property can be very enticing. With the right amount of due diligence and research, buying commercial real estate can be a wise investment decision. Call to speak to one of our certified professionals for assistance, 937-335-8807 or send us a message.