Before you even write the purchase agreement, you should be looking at 2 things: whether or not you can convert the building to completely residential and whether your bank will loan you the money one way or the other on this property. Whether you have a commercial or residential purchase agreement will not matter because the bank will send out an appraiser and if you are trying to get this through as a residential property and the appraiser considers it to be a commercial property, you will not get your loan. So talk to your bank, talk to the municipality and then make your decision. What kind of purchase agreement you use would make no difference whatsoever.
Real Estate Investment: Agreement Of Purchase – Should A Comercial Form Be Used Or Residential In This Case..?
Hi,
I am putting an offer to purchase a property.
It’s a 4-plex with a Boucher shop on the main floor. so 4 residential units being rented out plus Boucher shop currently operated by the Seller.
The zoning based on City Planning Department is RESIDENTIAL.
After the purchase I do not plan to operate any store or Boucher shop there meaning the use will be 100% residential.
However, currently one can say its use is commercial/residential mix.
My question is what form should I use to put an offer – COMMERICAL Agreement of purchase or RESIDENTIAL Agreement of Purchase? I think some banks and lawyers treat commercial different than residential.
How will the bank decide whether it’s residential or commercial:
- Current use? (=residential/commercial mix) or
- Future use by buyer/me? (=residential only) or
- City Zoning? (residential)
THANKS.
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4 comments - add yours
Pat B
August 31, 2009
Bad Co.
August 31, 2009
I believe you should use a residential purchase form, or a multi family dwelling form if there is such thing. Just put in additional info part weather the lease will be honored to the current renters of the retail part and that when lease has expired that it will be multi family or solely residential. If seller’s object, then just do and addendum. Good Luck
kemperk
August 31, 2009
1-4 units, res
5+ commercial.
if you want the best deal, at no cost to you,
find a rare commercial BUYER’s agent
[if you need help, I can find one for you]
Brian
August 31, 2009
You would think the banks would go with the city zoning if they were smart, but who knows anymore what the banks are going to do to us. 
