If you can walk away from buying a property that even hints at having problems, then either make sure the problems are cleaned up, paid for, or dealt with to your satisfaction, or walk from the deal. | CHAPTER 5 How to Accomplish Effective Due Diligence The goals of this chapter are To Illustrate What You Must Know Before You Buy Build or Lease To Show You the Easy Steps to Ascertain This Data and What to Look For To Give You Directions to Turn to When Things Turn Up Less Than Sweet Due diligence is a term that few people used 20 years ago. Back then it was simple You were allowed to make inspections and if everything looked okay you d go ahead with your plans. But times change and prices are getting higher and legal problems more costly to deal with no matter if you are the buyer or the seller. The word of the day is caveat emptor let the buyer beware . This applies no matter what kind of real estate you are buying and especially with commercial real estate because consumer protection laws that give home buyers some legal rights against sellers who violate those laws generally do not 75 COMMERCIAL REAL ESTATE INVESTING apply to investment property of any nature. You must be cautious and assume that the worst can happen even when dealing with noncommercial property. In one recent Florida court case the judge ruled that a residential condominium was a commercial property because the buyer planned to rent out the apartment. Because it was now a commercial transaction the buyer could not claim protection under laws of willful misrepresentation by the seller even though the seller had lied about certain violations. The decision was based on the fact that as a commercial transaction the buyer had been given ample time to make any and all inspections possible and he had signed a contract that indicated the property was to be purchased as is. In this chapter I show you what you need to know before you buy build or lease what you should do to go about getting the information what problems you might find and where they can hide from you and what to do once you are faced with those problems. It is essential for you to understand that commercial real estate presents far .
