Okay, before I start, remember, I am not now, nor have I ever been (but I sometimes wish I was) a lawyer. I am about to relate some legal information to you, so you need to check with a good commercial real estate lawyer if you have any questions.

Occasionally, some rather interesting court cases appear in the news regarding commercial real estate transactions. One that comes to mind was, if my memory serves me right, from BC. A buyer entered into a purchase contract with a seller for a property that had a marina of some sort. Now I know there are very few marinas in Edmonton, but the point of the case is relevant here too. I do not remember all the details, but for some reason, the seller changed his mind and refused to close the deal. In these kinds of cases, no doubt accusations flew back and forth about who did what, but in the end the judge forced the seller to close the deal. This is interesting because I believe there was a residence included in the deal and judges do not like forcing people out of their homes. The reason this particular judge did was because the property was very unique and it would have been very difficult for the buyer to find another property like it. Interesting. Again, I'm sure I missed a few facts, but the bottom line is that the more unique the particular piece of real estate, the more likely this could be a factor in court, yes even in Edmonton.

Another issue is good faith. I don't have any particular court cases coming to mind, but in any contract (which is exactly what a commercial real estate purchase is, a contract), acting in good faith is expected of both parties. Often, for whatever reason, buyers decide they no longer wish to purchase a particular property and refuse to remove their conditions, ask for their deposit back, and move on to the next piece of real estate. This is okay IF the reason you walked away was covered by your conditions AND you made a reasonable effort to satisfy that condition. Example - you make an offer to buy a piece of commercial real estate with three conditions - SUBJECT TO Finance, inspection, and environmental assessment. Before you remove conditions you find a hot listing 2 blocks down that suits you better. You had an appointment to go to the bank that day for financing so you cancel it and advise your agent not to remove conditions and to get your deposit back. While it is not that common, the seller could ask for proof that you were refused for financing by a couple of banks. If you can't, they could argue a case to keep your deposit AND if the market turned down, they could sue you for the difference if they sold it subsequently for less money.

Now, remember to check with a lawyer because court cases are never that simple, but these two scenarios should provide you with some interesting food for thought.

SO what's the bottom line? Don't make an offer to purchase until you are satisfied this is the right property for you, make sure you use an agent who is familiear with commercial real estate, and make sure you discuss with your real estate agent what conditions should be placed in your offer for your protection.