If you are a small business owner, at one time or another you have probably considered buying an improved property to house your business.  The idea of no longer having a landlord to deal with or imagining a grand investment may make it seem enticing, but there are important legal considerations a small business owner should evaluate before purchasing property. 

Owning commercial property opens up a whole slew of concerns.  What if someone slips and falls on the sidewalk in front of your building?  Is the business liable?  Must the new space be compliant with disability laws?  And what do you do if you outgrow the space?  Assume you make widgets; your business grows and you out-grow your space.  You know how to make widgets but now you also need to decide what to do with your property.  Presumably, you can sell it, but depending on the situation, you could, for example, end up with unforeseen tax consequences or, depending on market conditions, you may be forced to sell your property at a loss, which means needed capital that could otherwise be used for your expansion is tied up in the property.  And if you choose to hold onto the property and relet it, you’re suddenly a commercial landlord, and with that, comes all the headaches and risks associated with leases and tenants.    

Generally my advice for small businesses is that you stick to what you know best and, more times than not, that will be your very own widget industry.  For those businesses where purchasing property makes sense, you should consult with your accountant and an attorney to review any contracts and ensure potential liabilities are minimized.  For more information or assistance with commercial real estate, please contact Jamie Kent Hamelburg with Press, Dozier & Hamelburg, LLC.

This blog was authored by the team at Press, Dozier & Hamelburg