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Investing in commercial real estate is a big step—but what happens if things don’t go as planned? Whether it’s a shift in your financial situation, new discoveries during due diligence, or contract concerns, knowing when and how you can back out of a deal is crucial.
When Can You Walk Away?
If you’ve only made an offer but haven’t signed any contracts or transferred money into escrow, backing out is simple. No legal ties, no penalties. However, once you’re in contract and earnest money is involved, your ability to walk away depends on the terms negotiated in your agreement.
The Importance of Due Diligence
Before closing, you should have a due diligence period to inspect the property and verify key details. Issues with the title, structural concerns, or misleading financials can be reasons to reconsider.
📌 Having an experienced commercial real estate broker and real estate attorney in your corner is critical—they ensure your contract includes protection clauses for unexpected issues.
How to Protect Yourself in a Deal
✔ Negotiate contingency clauses – These can allow you to exit if financing falls through or if major property issues arise.
✔ Triple-check due diligence materials – Don’t take documents at face value; verify all details.
✔ Work with the right team – A knowledgeable broker and attorney can safeguard your interests from day one.
Backing out of a commercial real estate deal is possible, but it comes down to timing, contract terms, and having the right protections in place. If you’re considering an investment and want to ensure you’re making the best decision, reach out to professionals who can guide you through the process.
Thinking about a commercial property but unsure about the risks? Let me know your questions!