The perfect property for your investment already exists. But is it in the right location? Can it cater to your plans of building a mall? Come to think of it, can you turn a residential place into a cafe?
It’s safe to say that finding the ideal space comes with knowing exactly what you need. But it’s equally important to know what to look out for, especially when it comes to the legal aspects of buying a property.
What counts as commercial?
Commercial real estate is classified by the New Jersey state code as Class 4A and is defined as any income-generating property. This excludes properties in separate categories, such as industrial space or apartments. So, if you’re looking to build offices, theaters or even shopping centers, you need commercial property.
The legal landscape: Commercial vs. residential
Several laws govern both commercial and residential estates, and they are distinct from each other in important ways. If you overlook these legal details, you may face unexpected costs, permit issues or fines. In some cases, it could delay your purchase or limit how you use the property, disrupting your business plans.
- Zoning laws: These regulations determine how you can use a property based on its location. In New Jersey, local governments designate commercial zones for businesses like retail shops, offices, and restaurants. They reserve residential zones for housing. If you want to run a business in a residential area, you usually need special approval from the local zoning board.
- Environmental regulations: Government agencies enforce stricter standards on commercial sites, especially when hazardous materials are involved. If inspectors find contamination, they may require you to clean it up before moving forward. Residential properties face fewer rules, but you must still address any environmental hazards to ensure the property is safe.
- Property taxes: Tax assessors evaluate both commercial and residential properties based on market value. However, they also assess commercial properties by their income potential, which usually results in a higher tax rate.
Navigating the landscape of commercial real estate laws can be challenging without help from professional counsel. Knowing how the legal process works can help you make the right investment decision.
Are you legally ready to invest in commercial property?
Investing in commercial real estate in New Jersey requires an understanding of various legal factors. But don’t let this stop you from building that quaint coffee shop or luxurious clothing store.
Start by reviewing local zoning laws to ensure the property fits your business plan, and conduct an environmental assessment to avoid unexpected cleanup costs. Be sure to understand property taxes, as they can affect your bottom line, and prepare for any required permits or approvals. By recognizing these key distinctions with the help of the right legal professionals, you can position your investment to align with your long-term business goals.