How do “commercial” real estate transactions differ from “residential” ones?
As a general rule, “commercial” real estate transactions are riskier and far more complex than “residential” ones, and they are usually a lot more expensive. But there are other differences, some of them quite significant. We all generally know what’s involved in owning a house, in terms of maintenance costs, potential liability and other routine everyday aspects of home ownership. Because of long-standing restrictions on the use of hazardous materials on residential property, there are few instances, apart from lead paint or asbestos ceilings/insulation where you have to worry about toxic torts. If you buy a vacant commercial lot, however, you may not realize, without spending a lot of money on testing and research, that the property may once have been used as a gas station, leaking having created a massive underground lake of gasoline. The cost of cleaning up the mess and insuring against potential toxic tort liability could amount to several times the purchase price of the property.
