Contract disputes can create significant problems for parties involved in commercial real estate transactions. These may include unexpected costs, lost deposits, delayed or failed transactions and loss of business income.
Understanding the potential issues during the course of the contract is important. It may help you avoid additional litigation costs. It can also help safeguard your investment.
What can go wrong with commercial real estate contracts
Common commercial real estate disputes in Mississippi may involve complex, high-stakes agreements. Some contract problems include:
- Property and title issues: Due diligence can reveal title, environmental and zoning issues. Hidden liens, boundary issues or easements can affect ownership. Zoning rules may limit how to use the property for the business.
- Contract and enforcement problems: The contract should clearly explain each party’s rights and responsibilities. Oral agreements, unclear terms and strict lease rules can make it harder to protect the party’s rights. Complete contracts can help avoid these issues.
- Delays in closing: Contracts set deadlines for inspections, financing, paperwork and closing. Missing these deadlines can delay the transaction or cause it to fall through. The contract should explain whether the parties can get extra time, end the agreement or use another solution.
The contract should provide that if either party defaults, it is necessary to describe what remedies are available. These may include keeping the earnest money deposit, seeking damages or ending the agreement.
Addressing contract issues before they escalate
Commercial real estate contracts involve large sums of money and can have significant business interests. Reviewing the terms, deadlines and remedies can help prevent or resolve disputes by clarifying each party’s rights. A clear and fair contract can help protect the parties’ rights and reduce the risk of costly litigation when disputes come up.
