Minimizing Your Risks as a Buyer
Purchasing residential or commercial property always involves significant risk. Fortunately, as a buyer, there are several ways you can minimize your risks.
First, as a wise purchaser, you should reserve sufficient time to do your own due diligence concerning the condition of the property you want to buy. The length of the due diligence period is negotiable, but 30-60 days is typical. Regardless, it should be ample time for you to have inspections, investigations, and feasibility tests performed by qualified professionals. Depending on the property’s location and characteristics, those might include inspections and tests concerning environmental hazards, soil stability, grading, termites, mold, asbestos, structural issues, flooding, water damage, noise, odors, traffic, roofing, electrical, plumbing and mechanical systems, zoning, and the like.
Exacting representations and warranties from the seller is another means of limiting your risks as a buyer. Common seller representations cover such topics as marketable title, mechanic’s liens, litigation, compliance with laws, hazardous substances, and access to the property. Then, if any of the seller’s representations and warranties turn out to be false or misleading, at least you’ll have a remedy to recover your damages.
Next, no buyer should purchase real estate without procuring liability and title insurance. Having proper insurance helps to ensure that you won’t have to come out of pocket nearly as much if somebody is injured or challenges your ownership down the road.
Requiring the seller to indemnify and defend you against certain claims by third parties, such as brokerage commissions, is yet another way to allocate your risks to somebody else.
Finally, it almost always pays dividends to have an experienced attorney assist you with your purchase transaction. The old adage “you can pay me now or pay me later” is as true now as it ever was. Hiring a competent attorney to assist you with common pitfalls on the front end usually saves you from paying dozens of times more on the back end if something goes wrong.