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The importance of commercial zoning due diligence

On Behalf of | Sep 30, 2021 | Commercial Real Estate |

If you are considering leasing a commercial space, you have countless factors to consider. From the size of the space to the terms of the lease, there is no shortage of details on your list to examine. One of the most important is the due diligence performed regarding zoning. If you and your counsel neglect this crucial detail, you and your business could find yourselves with a complex problem.

Commercial zoning due diligence: an overview

Due diligence is the process of investigating and confirming details before entering a legal agreement with someone. In commercial zoning, this involves researching the zoning regulations of a certain commercial space to ensure that your business can operate out of the space without violating any municipal ordinances. The steps may involve:

  • Interpreting local zoning ordinances
  • Searching for title defects
  • Determining whether the previous tenant had a variance
  • Finding conditional use clauses
  • Researching sign limitations and parking regulations
  • Ensuring regulatory compliance
  • Inspecting the HVAC system, plumbing, foundation and more

Due diligence can take anywhere from a few days to a few months depending on the complexity of the terms of the lease, the zoning laws of the area and other factors.

What are the risks of avoiding due diligence?

Many commercial leases go off without a hitch. Others, though, lead to expensive complications because of a landlord or tenant’s failure to perform adequate due diligence. In some instances, it can result in the termination of the lease, leaving the tenant scrambling to find another space. Municipalities could also charge fines to tenants who violated an ordinance, even unintentionally. Even if you are not forced to move out of the space, you might have to stay in a space that does not suit your needs. Most importantly of all, without proper due diligence, your business could suffer hits to its productivity and profitability.