Nationwide, regardless of the market, one of the leading reasons for real estate litigation is failure to disclose property defects. This is true for both residential and commercial transactions, but commercial transactions often involve greater publicity, expense, and lasting impact. The expense can be exacerbated, for all parties, by reputational damage, business interruption, and lost relationships.
I say "all parties" because commercial transactions involve more than sellers and buyers. Too often, brokers are overlooked, or just viewed as facilitators of a transaction. However, in many cases the most innocent party in a purchase sale agreement is the seller's broker. They rely heavily on the honesty and integrity of their client. They also build their business on relationships. Everyone benefits when this cycle is functioning. Often, a significant step in the listing process is a seller's disclosure questionnaire. Sellers should always be candid and honest when completing this form. Failure to disclose defects puts both the seller and broker in legal jeopardy. Another important factor.... knowledge of the defect is not absolutely necessary. In a courtroom, a judge or jury will heavily consider whether the owner/seller should have 'reasonably known about the defect.' Some sellers are merely passthrough, or passive, investors in a property and may have never even been onsite. This can be a defense for nondisclosure, but it's definitely no guarantee. In any transaction that proceeds to litigation the broker becomes another respondent or defendant. So instead of building a long-term relationship with a seller, buyer and buyer's broker, they become an adversary. This process benefits no one (except, of course, the attorneys involved).
Commercial property is typically much more complex than residential property. We can give all parties peace-of-mind in the course of ownership or management transfers. Whether working on behalf of sellers, buyers, brokers or even lessees, our goal is for all parties to act with integrity and build long-term relationships to everyone's benefit.
There are multiple versions of commercial property inspections. The simplest is a walkthrough with the contracting party. Ideally, this walkthrough will be attended by the party with the most knowledge of the property/building. This level of inspection takes the least amount of time to perform and the least amount of time to report. During the walkthrough concerns, observations of defects, and basic information are shared with the parties verbally. Following the onsite phase, a brief letter may be requested/provided to document those same observations and concerns.
At greater expense in time and cost is a complete commercial property inspection with a detailed report including photos, observations of defects and/or items of concern, and possibly even estimated costs to remedy. Depending on the size of the property, this level of inspection can take hours or even days to complete onsite. The report can take much longer...up to. two weeks.
These inspections may even require the participation of engineering experts: structural, electrical, mechanical. We can assemble expert teams, with proposal, that will prepare their own detailed report including all disciplines represented. This level of inspection is obviously the most thorough and detailed, and therefore the most helpful in large-dollar transactions.
Inspection services may be requested by any parties to the transaction. The party most at risk, and most invested in the property's future, is the buyer. For that reason, they are the most frequent requester. However, sellers may initiate the process as part of the pre-list arrangement with their broker. Facilit8 can provide a pre-list inspection, including interviews with the seller and/or sellers representative, and assist with the completion of the seller's disclosure questionnaire. This can benefit all parties and improve trust and relationship building for all involved. But should buyers trust this inspection report? In our case, absolutely "YES!" However, any insecurity is understandable.
Ideally, all parties would mutually agree to a full inspection and share the expense. This resolves questions of bias or favoritism. An ethical inspector should always view all parties equally, but it's really easy to do when they are all clients.