Legal Due Diligence in Commercial Real Estate Transactions

Purpose - The purpose of the paper is to give an overview on the goals of the legal due diligence in the greater context of commercial real estate transactions.Design/methodology/approach - The paper first analyses the purpose of the legal due diligence in an acquisition process. In a second step it analyses those legal issues that – in the experience of the author – frequently arise in standard transactions and how to address them. Thirdly, it analyses the consequences of each of these issues on the acquisition process.Findings - Legal issues that frequently pop up during a due diligence are categorised in (a) deal breakers, (b) issues that need to be resolved before signing the purchase contract, (c) issues that need to be addressed in the acquisition contract and (d) risks that need to be accepted but may have implications on the purchase price.Research limitations/implications - Although the legal issues are similar in most continental European States, the overview is limited to Austrian law and limited commercial real estate transactions. Non legal issues (in particular: tax, financial, environmental and technical issues) as well as other areas of real estate (residential) are excluded. As each real estate transaction is different, the list is non-exhaustive.