Purchase & Sale of Commercial Properties

The purchase or sale of a commercial property is one of the most significant transactions a business owner or investor will undertake. Unlike residential real estate, commercial transactions are individually negotiated, often involve complex legal structures, and require a level of due diligence that goes well beyond what is standard in a residential purchase. At Goldstone Law Professional Corporation, we represent buyers, sellers, investors, and lenders in the purchase and sale of all types of commercial properties across Ontario. From office buildings and retail plazas to industrial facilities, mixed-use developments, and income-producing apartment buildings, our commercial real estate lawyers bring the legal expertise and commercial insight required to close these transactions successfully.

Due Diligence in Commercial Transactions

Due diligence is the cornerstone of any commercial real estate transaction. For a buyer, the due diligence period — typically negotiated as a condition in the Agreement of Purchase and Sale — is the critical window during which you investigate the property thoroughly before committing unconditionally to the purchase. A comprehensive due diligence review in a commercial transaction typically includes:

Title and Off-Title Searches

We conduct a comprehensive title search to identify all registered instruments, encumbrances, easements, and restrictions affecting the property. We also conduct off-title searches, including property tax status, outstanding work orders, building permits, zoning compliance, conservation authority approvals, and development charges. Any encumbrances that affect the intended use or value of the property must be addressed before closing or reflected in the purchase price.

Environmental Review

Environmental issues represent one of the most significant areas of risk in commercial real estate transactions. Buyers should obtain a Phase I Environmental Site Assessment (and, where warranted, a Phase II ESA) to identify any actual or potential environmental contamination affecting the property. Environmental liability can be severe and, in many cases, follows the land — meaning that a buyer who acquires a contaminated property may become responsible for remediation costs even if the contamination predates their ownership. We work with environmental consultants and advise buyers on the legal implications of environmental findings.

Zoning and Land Use Review

A property’s permitted use is determined by its zoning under the applicable municipal zoning by-law. Before purchasing a commercial property, it is essential to confirm that the property is zoned to permit your intended use — whether that is retail, office, industrial, residential, or a combination. We review the zoning classification, any site-specific zoning provisions, and any minor variance or zoning amendment approvals that affect the property, and advise clients on any planning approval requirements for their intended use.

Lease Review

If the property being purchased is tenanted, we review all existing leases, including their terms, rent levels, renewal options, exclusivity provisions, and any outstanding obligations of the landlord. The quality and stability of the tenancy is often a critical factor in the valuation of an income-producing commercial property, and understanding the legal terms of the leases is essential to assessing the investment.

Survey and Building Condition Review

We advise buyers to obtain a current survey of the property and, where appropriate, a building condition assessment (BCA) prepared by a qualified engineer. The BCA identifies any structural, mechanical, or systems deficiencies in the existing improvements, which may affect the purchase price or require post-closing capital expenditure.

Structuring the Transaction: Asset Purchase vs. Share Purchase

Commercial real estate can be acquired either as a direct asset purchase (where the buyer acquires title to the land and improvements) or, where the property is held through a corporation, as a share purchase (where the buyer acquires the shares of the corporation that holds the property). Each structure has distinct legal and tax implications that must be carefully analyzed before the transaction structure is finalized. An asset purchase gives the buyer a clean start — they do not inherit the vendor’s historical liabilities. A share purchase may offer tax advantages but requires the buyer to conduct corporate due diligence in addition to property due diligence, including a review of the corporation’s tax filings, employment obligations, and any outstanding claims or liabilities. We work closely with our clients’ accountants and tax advisors to ensure that the transaction structure achieves the optimal outcome.

Closing a Commercial Real Estate Transaction

Closing a commercial real estate transaction involves coordination among multiple parties — buyer, seller, mortgage lenders, title insurers, commercial brokers, accountants, and in some cases, municipal authorities. We prepare and review all closing documents, including the Transfer/Deed of Land, direction regarding funds, vendor and purchaser statutory declarations, indemnities and undertakings, assignment of leases, estoppel certificates from tenants, and any other documents required to complete the transaction. We manage the flow of funds through our trust account, coordinate the discharge of any existing vendor mortgages, register the new title and mortgage, and ensure that all closing conditions are satisfied before funds are released. Our goal in every commercial transaction is to achieve a seamless, professionally managed closing that protects our client’s interests at every step.

Frequently Asked Questions — Commercial Property Purchases & Sales

How long does a commercial real estate transaction take in Ontario?

Commercial real estate transactions are typically more time-consuming than residential transactions. A straightforward commercial purchase may close in 60 to 90 days. Larger or more complex transactions — including those involving multiple tenants, financing conditions, environmental reviews, or zoning approvals — may require 90 to 180 days or more. We work with our clients to establish realistic timelines and manage the process efficiently.

Do I need an environmental assessment for every commercial property purchase?

Not every commercial property requires a Phase II Environmental Site Assessment, but a Phase I ESA is strongly recommended for virtually all commercial acquisitions. A Phase I ESA is a non-invasive desktop review and site visit that identifies recognized environmental conditions based on historical land use, regulatory records, and physical inspection. If the Phase I ESA identifies potential concerns, a Phase II ESA involving physical sampling and testing may be warranted. We advise clients on the appropriate scope of environmental due diligence for each property.

Contact Goldstone Law for experienced commercial real estate legal services. We represent buyers, sellers, and lenders in commercial property transactions throughout Ontario.