Purchasing Oklahoma real estate is a significant investment, whether for personal use or business purposes. While residential real estate transactions typically follow a straightforward process, commercial transactions require a more detailed approach. The additional due diligence, financing considerations, and business structuring make commercial deals far more involved than buying a home. Business owners in Oklahoma need to understand these key differences before closing on a property to avoid costly litigation.
Differences in Due Diligence
Due diligence in commercial real estate transactions goes beyond standard inspections and financial disclosures seen in residential sales. Commercial buyers must assess not only the property’s condition but also its financial viability and legal standing. This process can take up to 60 days and includes specialized inspections, zoning verification, and a deep dive into historical and projected income for the property.
Buyers must also analyze existing leases if the property is tenant-occupied and confirm compliance with local and state regulations. Oklahoma businesses purchasing commercial property often enter agreements containing non-disclosure or non-compete provisions to protect proprietary information. These contracts must be carefully reviewed to avoid future legal disputes. The depth of due diligence required can significantly extend the timeline for commercial real estate transactions, whereas residential closings often occur within 30 to 45 days.
Structuring the Real Estate Holdings
Unlike residential real estate, where individuals typically purchase property in their name, commercial buyers usually hold title through a business entity. Limited liability companies (LLCs) and corporations are common structures because they help shield owners from personal liability and offer tax advantages. Properly structuring ownership from the start protects the buyer’s financial interests and simplifies future transactions.
Lenders also factor in how the purchasing entity is structured when determining financing terms. Oklahoma banks scrutinize business finances, credit history, and cash flow before approving a commercial loan. Many lenders require that a business occupy at least 51% of the purchased property to secure favorable loan terms. Additionally, commercial real estate loans often depend on the debt service coverage ratio (DSCR), which measures a business’s ability to cover debt payments. Residential mortgage approvals rarely involve this level of financial scrutiny.
Working with an Experienced Commercial and Residential Real Estate Attorney
Completing a commercial real estate transaction in Oklahoma requires legal guidance from an attorney who understands business law and real estate regulations. Pence Law Firm helps business owners structure their real estate purchases in ways that align with their long-term financial goals. Whether negotiating contracts, managing due diligence, or ensuring compliance with state laws, having an attorney involved helps streamline the process. Contact Pence Law Firm today to discuss your real estate transaction and ensure your Oklahoma real estate investment is protected.
