FREQUENTLY ASKED QUESTIONS
COMMERCIAL REAL ESTATE IN COLORADO SPRINGS
What are the differences between residential and commercial real estate?
The most common difference between the two is the frequency with which commercial real estate is leased. It is much less common for commercial real estate to be sold, as many commercial spaces are owned by large real estate holding companies and leased out to business owners. However, many residential properties change ownership often.
The length of leasing terms generally differs greatly as well. Whereas, residential leases tend to last on average one year, a commercial space in Colorado Springs will likely be accompanied with a much longer lease term.
Because building and land use in a residential property consists of one general use – to live in it – the regulations and zoning issues rarely cause issues for homeowners. However, commercial spaces often have major zoning considerations, as well as environmental concerns that must be acknowledged.
If I hire you to assist in real estate transactions, why do I still need to hire a lawyer?
Any commercial real estate broker in Colorado Springs that you hire should be well versed in the industry and current economics; however, the complexities of commercial real estate law goes beyond the scope of expertise and legal allowance for most commercial brokers.
Hired to find and negotiate the best deal, commercial brokers are not intended to be legal counsel for your transactions. An attorney is always advisable for your legal protection.
How should I take title to commercial property?
The commercial real estate industry is always more complex than residential. Because of this, it’s important to seek professional advice from your accountant and lawyer about property purchases. Consider putting the title of new property in a corporation or limited liability company for the sake of personal legal protection.
What is an environmental site assessment (ESA) and do I have to get one?
Some lenders may require an environmental site assessment on your commercial property. While it may seem an unnecessary process initially, we don’t recommend skipping this evaluation.
An ESA looks at the past and present use of the property as it pertains to potential environmental hazards, including the release of hazardous substances or petroleum products located on the property.
This limits your liability as the purchaser, as you certainly do not want to be strapped with costly clean-up initiatives from events that happened before your ownership.
What is a 1031 Exchange?
Often used within commercial real estate transactions, the 1031 exchange is a method of deferring tax on the sale of an interest in real property. This is possible only if the proceeds of the sale are reinvested into a property of equal or greater value and of like-kind.
The 1031 exchange is often used by investors in multi-family properties and office complexes to continually upgrade facilities and cashflow, incurring minimal profit loss.