Real Estate for Business Use vs. Residential Use
Most businesses, other than pure online concerns, require some form of commercial Real Estate to run their businesses. You will find commercial properties to accommodate everything from mom and pop retail stores through large industrial concerns. Some of these commercial properties are rented or leased. Some are individually owned strata properties. Some are simple freehold properties.
In very many cases the viability and success of a business may depend entirely on the Real Estate it occupies (location, location, location). Securing that location can be a paramount concern for these businesses – a matter of “life or death”.
There are a number of very important differences between commercial or industrial Real Estate and the more familiar residential property.
Municipal or regional districts will normally have bylaws and regulations impacting a property’s use, some of which may be quite specific, provincial regulations may affect it, federal environmental and other laws may impact a commercial or industrial property and so on. There may be specific property tax measures that apply to them. In short there are very great differences between residential Real Estate and that which will be used by a business. As always, where these matters are concerned, careful legal advice is recommended prior to any dealings with these types of properties.
Selling or Purchasing a Commercial or Industrial Property
When either selling or buying a commercial or industrial property, you should be aware that there are a number of factors and issues to take into consideration which you won’t encounter in a residential transaction, among them possible environmental liabilities and other encumbrances.
We strongly urge business owners to obtain both legal and accounting advice before entering into a binding agreement either when buying a property or selling one. There are a great number of considerations which must be examined, both from a legal and from an accounting viewpoint that can substantially impact a business. There are also tax liabilities and accounting issues that require the advice of an accountant. It always better to know what they are before you commit to a transaction. Be aware, as well, that the structure of your business (sole proprietorship. partnership or incorporated company) also has material impacts.
Leasing or Renting – Commercial Real Estate vs. Residential
There are substantial differences in leasing or renting a commercial property that aren’t encountered in residential rental agreements or leases. Being a Landlord or a Tenant each have special and extensive legal rights and responsibilities in a commercial property situation that are quite different from residential tenancies.
Issues you should pay careful attention to include length of the agreement, inclusion or exclusion of utilities, common area maintenance charges and fees, applicability of local zoning regulations and suitability of the premises for the uses you will make of them.
You may wish to look over the governing BC law to understand some of the many issues you should keep in mind: BC Commercial Tenancy Act. In addition, we are happy to meet with you and review an agreement you may be considering. It is important to carefully consider the issues before you sign a contract.
Both the landlord and the tenant need the benefit of professional advice.
Careful legal advice and properly prepared and executed lease documents are important when entering into a commercial or industrial lease. There are a number of issues you may not have encountered previously, such as net leases and other contractual obligations. There are also often side issues you need to address that may require the advice of your accountant as well.
Feel free to use the message form in the sidebar to ask questions you may have or give us a call (local 250 492-2425 or if you are out-of-town, call us Toll Free 1-877-492-2644).