10 Legal Pitfalls to Avoid in Your Next Commercial Real Estate Deal

Every commercial real estate deal comes with opportunity—but also with risk. Whether you’re acquiring a stabilized asset, developing ground-up, or negotiating a joint venture, one overlooked clause or assumption can lead to costly consequences. At CPL, we work with clients across the full deal cycle, and we’ve seen firsthand the legal missteps that can derail an otherwise solid transaction. 

Below are 10 common legal issues to watch for. 

1. Skipping Legal Review of the LOI 
A letter of intent may not be binding, but its terms often set the tone for the entire deal. Agreeing to material terms like closing timelines, rent concessions, or “market” provisions without legal input can lock you into an unfavorable position before the actual contract is negotiated. 

2. Incomplete or Rushed Due Diligence 
Zoning, title, surveys, environmental reports, building violations, leases, and lien searches all need to be reviewed thoroughly. Missing a red flag—like an unenforceable use clause or an open ECB violation—can come back to haunt you post-closing. 

3. Overlooking Assignment and Transfer Restrictions 
In both leases and loan documents, these provisions control your flexibility down the line. If you plan to syndicate equity, refinance, or bring in a partner, these clauses must be carefully negotiated upfront. 

4. Poor Entity Structuring 
Choosing the wrong entity, or failing to properly document roles, authority, and capital contributions in operating agreements, can cause internal disputes or tax inefficiencies. We regularly help clients align their legal structure with deal strategy. 

5. Not Understanding Non-Recourse Carve-Outs 
Just because a loan is labeled “non-recourse” doesn’t mean there’s no personal liability. Many lenders include broad carve-outs that can spring into full recourse under certain conditions. Knowing exactly what triggers liability is essential. 

6. Failing to Review Estoppels and SNDA Agreements 
When buying an income-producing asset, estoppels confirm tenant obligations and lease status. Without them, you risk inheriting problems you can’t unwind. Similarly, SNDA agreements are critical for aligning tenants and lenders in distressed scenarios. 

7. Mismanaging Construction and TI Agreements 
For development or lease-up deals, construction timelines and tenant improvement obligations must be clear and enforceable. We often see parties rely on handshake agreements or vague exhibits, which leads to delays and disputes. 

8. Overlooking Local Law Compliance 
From zoning overlays to energy benchmarking to ADA compliance, local laws can impact value and timing. Real estate is hyperlocal, and what worked in one borough, city, or county may not apply to your next site. 

9. Not Having a Clear Exit Strategy 
Real estate deals rarely go exactly as planned. If your joint venture agreement, loan, or lease doesn’t give you options to exit, sell, or restructure when needed, you could end up stuck. Always plan for flexibility, not just the best-case scenario. 

10. Waiting Too Long to Loop in Legal Counsel 
Too often, clients come to us after terms have been agreed to or documents signed. Involving your attorney early can save time, money, and headaches. A good lawyer doesn’t slow down your deal, they make sure it actually closes, cleanly and confidently. 

Final Thoughts 

Real estate is a team sport, and smart legal counsel is part of that team from day one. At CPL, we partner with investors, developers, and brokers to help you anticipate issues before they become problems, protect your interests, and close deals that are not just successful, but sustainable.