Legal Blog

M & A Nuggets: Real Estate Issues-No. 3

shutterstock_114456130This nugget is the third in a series discussing real estate issues related to the purchase of a business that uses real estate owned by the seller or its owner.  This nugget will discuss the importance of investigating the use and zoning of the property.

As basic as this sounds, you need to make certain that the use you intend to make of the real estate is permitted by the applicable land use laws.  I have encountered situations in which the use intended by the seller was not originally permitted by the zoning laws and the seller had to obtain an exception for what is known as a non-conforming use.  In that situation, caution must be exercised because non-conforming uses can be limited in time and to a specific user.  You also need to understand exactly what portion of the real estate the seller uses and verify that no third parties have a right to use any part that could interfere with the operations of your business.  While you certainly will ask the seller to make representations in the purchase agreement regarding these matters, a visual inspection and survey is often needed to verify whether there are any encroaching uses by third parties.  The last thing you would want to happen is to find out after your purchase that you cannot use the real estate for the purpose intended or that your use of a portion of the real estate will be shared with a third party.  By exercising diligence, you can avoid those unpleasant surprises.


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Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress






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