What Buyers Often Overlook in Purchase Agreements, and Why it Can Cost Them 

Northern Colorado’s commercial real estate market continues to evolve as communities in the area experience steady growth. While buyers understandably focus their time on negotiating price and securing financing, some of the most significant financial risks are hidden in the purchase and sale agreement.

Potential buyers may assume the property’s condition tells the whole story.  A buyer may purchase land that appears ready for development, only to discover recorded irrigation easements, ditch company rights, access agreements, or utility easements that limit how the property can be used. Likewise, agricultural properties transitioning to commercial or industrial uses often present unique challenges involving water rights, conservation restrictions, or existing agricultural leases. These issues are rarely apparent during a walk-through but can significantly affect the property’s value and future development potential.

Title review is another area where buyers should exercise careful due diligence. The title commitment may disclose recorded agreements that have existed for decades, and remain enforceable. Old leases, pipeline easements, reciprocal access agreements, restrictive covenants, and mineral reservations can all impact ownership rights. Buyers who simply assume these matters are routine exceptions may find themselves unable to expand a building, construct additional parking, or fully utilize the property as intended.

This is why the due diligence period is critical. Buyers should view this time as much more than an opportunity to inspect the land and buildings. It is also the chance to evaluate zoning, permitted uses, survey matters, utility availability, service contracts, permits, existing leases, and title documents. 

Buyers should also confirm that planned municipal improvements, road expansions, or development around the property will support (not hinder) their intended use.  Buyers who approach purchase agreements with the same level of scrutiny they give the property itself are better positioned to protect their investment and avoid costly surprises in the future.

Commercial real estate transactions are structured to allocate risk among the parties. A carefully negotiated purchase and sale agreement does more than establish the purchase price and closing date: it determines which party bears the financial consequences when unexpected issues arise. Spending the time to understand those provisions before signing is often far less expensive than resolving disputes or correcting problems after the transaction closes.