Q: I run an office-based business and I am interested in purchasing a property from which I can operate. There are lots of commercial buildings out there but I had thought I might buy a commercial condo. What should I be aware of when considering this type of real estate investment?
A: Many people consider owning the property that their business operates from so that they are not paying often expensive commercial leasing rates to a landlord.
However, there are some definite issues that you must consider before you make an offer.
- Typically, if you are financing the property, the type of financing is quite different from obtaining a residential mortgage and the downpayment requirements are often substantially larger.
- You may have to guarantee the loan personally depending on the financial state of your business.
- If you are purchasing a condo, the requirement for a status certificate and review of all the condo documents by your lawyer will more than likely be a condition of the financing.
-Careful consideration must be given to the G.S.T./H.S.T. that is applicable to the purchase of a commercial property (unlike resale residential properties that do not require G.S.T./H.S.T. to be paid) as to whether it is included in the purchase price or in addition to the purchase price.
- If you are purchasing the property for your business, you should sign the Agreement of Purchase and Sale in your capacity as an authorized signing officer of the corporation.
Basically, the purchase of a commercial condo by a business is an entirely different type of real estate transaction than purchasing your home.
You will definitely need the advice of a qualified lawyer to guide you through the issues.
Jeffrey Cowan is the principal of Cowan Law and can be reached by email at email@example.com.