Making an offer for a commercial retail unit contingent upon finding a tenant

[David Switzer]

Hey all!

New to the forum and happy to be here!  I currently own a commercial condo, and when I purchased it there was already a tenant in place with a long term lease.

I am looking at a new commercial space that is built for retail, however it does not have a tenant.  My agent has told me she has received a lot of rental interest, but I can't really be sure.

Can I make an offer contingent upon finding a tenant to lease the space within X amount of time?  Is this ever done?


Thanks so much,

David

[Jeffrey Abraham]

1. Offer Contingency Based on Lease

Yes, you can make an offer contingent upon finding a tenant. This type of contingency is known as a "lease-up contingency" and is sometimes used in commercial real estate transactions. Here's how you can structure it:

• Contingency Clause: Include a clause in your offer that states the purchase is contingent upon securing a lease agreement with a tenant within a specified period.
• Time Frame: Define the time period within which you need to find a tenant. This could be 30, 60, or 90 days, depending on the market and your comfort level.
• Rental Terms: Specify any minimum terms for the lease, such as rental rate, lease duration, and tenant creditworthiness.

2. Due Diligence Period

In addition to the lease-up contingency, you can negotiate an extended due diligence period. During this time, you can market the property to potential tenants and secure a lease before the purchase becomes final.

Steps to Implement a Lease-Up Contingency

1. Consult with Your Agent and Attorney
   • Discuss your plan with your real estate agent and a real estate attorney to ensure the contingency clause is correctly drafted and legally sound.
   • Your attorney can help you draft a contingency clause that protects your interests.