Commercial Real Estate: Buy or Lease?

Kiriak Law


Real estate lawyers at Kiriak believe on the old business saying which advances a position that business often depends on the location of its commercial real estate to survive and grow. Retailers use their location to draw in as many customers as possible, while other businesses may be more concerned about lease rates, square footage, and convenient access for their employees. There are many different types of commercial leases a business owner may enter into with a landlord. First, we have fixed leases. These are much like a typical residential lease. In a fixed lease, the parties agree to a specific amount of rent for a fixed period of time. Next we have step leases. Herein, parties agree to increase the rent a certain amount yearly. The step lease is meant to acknowledge the potential cost increases the landlord may incur. The other is gross leases where gross the tenant will pay a set periodic (or fixed term) rent to the landlord. The landlord in a gross lease will agree to pay for some or all of the operating costs of the business.

Buying Commercial Property

If you have decided to buy commercial real estate, you should be aware of many factors included in your offer and affecting your possession and title to the piece of commercial real estate. Such include:

  1. Buyer’s duty to inspect: Before you purchase commercial real estate, you should hire someone to inspect the property for any defects that are not easily noticeable. Generally, the seller will not be held liable for problems with the property that she did not know about and did not actively conceal.
  2. Material defects within the seller’s knowledge: Many states require a seller who knows of a problem with the property that may influence the decision to buy to disclose the presence of this problem to the buyer.
  3. Actively conceal material defects: Generally, a seller cannot actively hide a defect in order to get you to buy the property.
  4. Encumbrances: An encumbrance is something that may burden your rights as an owner of property.
  5. Other potential environmental and zoning problems: See Environmental Law and Zoning, Planning and Land Use for more information.


Information in this article is provided for general informational and educational purposes only and is not offered as legal advice upon which anyone may rely. The law changes. No attorney-client relationship is created by the offering of this article. Kiriak Law does not represent you unless and until it is expressly retained in writing to do so.

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