When to Call Legal Counsel During a Commercial Real Estate Transaction

Andrew Prochnow

In commercial real estate, timing matters. Yet many owners and developers struggle with when legal counsel should be involved in a transaction—and when it may not be necessary. The misconception that lawyers slow deals down often leads to the opposite result: avoidable delays, last-minute renegotiations, and increased costs when issues surface too late.

Used strategically, legal counsel accelerates transactions, protects value, and reduces friction. The key is understanding where legal involvement adds the most value—and where it does not.

Why timing matters more than frequency

The question is not how often legal counsel is involved, but when. Early involvement allows issues to be identified and resolved while leverage still exists and timelines are flexible. Late involvement typically means working under pressure, with fewer options and higher risk.

Many costly deal problems originate from documents or assumptions made early in the process—long before counsel is asked to review them. Addressing structural issues at the outset is almost always more efficient than repairing them after terms are set.

Legal counsel is most effective when brought in as a planning resource, not an emergency fix.

When legal counsel should be involved early

Certain stages of a commercial real estate transaction benefit significantly from early legal review.

Letters of intent and term sheets

Although often described as “non-binding,” letters of intent and term sheets set the framework for the entire transaction. Key business terms—price adjustments, diligence periods, closing conditions, exclusivity, and remedies—are frequently locked in at this stage.

Early legal input helps ensure that:

  • Terms are internally consistent

  • Key protections are preserved

  • Later documentation aligns with the parties’ expectations

Small changes at this stage can prevent major disputes later.

Purchase and sale agreement negotiation

The purchase and sale agreement is the backbone of any transaction. Early legal involvement ensures that diligence rights, closing mechanics, and risk allocation are properly structured and enforceable under California law.

Waiting until after a PSA is “agreed upon” often limits the ability to correct structural deficiencies without reopening negotiations.

Lease structures tied to financing or redevelopment

Leases that affect financing, redevelopment, or future sale should be reviewed before execution. Legal counsel can identify provisions—such as co-tenancy, use restrictions, or assignment clauses—that may impair flexibility or lender approval down the line.

Where legal review is most critical

Some aspects of a transaction carry outsized risk and require careful legal scrutiny.

Due diligence and title review

Title exceptions, survey issues, easements, and recorded restrictions often create unexpected obstacles. Legal review ensures these issues are identified early and addressed before they disrupt financing or closing.

Financing documents and lender requirements

Loan documents frequently impose obligations that affect leasing, operations, and ownership structure. Aligning these requirements with existing documents is critical to avoid defaults or post-closing disputes.

CC&Rs, REAs, and recorded restrictions

Recorded documents can limit access, signage, parking, and future development. Understanding how these restrictions interact with site plans and leasing strategies is essential before moving forward.

When legal counsel may not be necessary

Not every action requires legal involvement. In some circumstances, counsel can remain in a supporting role.

Routine lease renewals with no structural changes

Simple renewals that do not alter rent structure, use rights, or assignment provisions may not require full legal review—provided the underlying lease is sound.

Minor amendments with no financing impact

Amendments that do not affect lender requirements, tenant rights, or recorded documents may be handled efficiently with limited legal input.

Transactions using institutional forms

In transactions governed by standardized institutional forms, legal review may focus on specific risk areas rather than full document restructuring. Even then, understanding the limits of these forms is important.

Common mistakes when counsel is brought in too late

Delaying legal involvement often leads to avoidable complications.

Fixing non-conforming leases after signing

Lease provisions that conflict with lender requirements are far more difficult to correct after execution, especially when tenants have little incentive to cooperate.

Renegotiating financing conditions under time pressure

When legal issues surface late, parties may be forced to renegotiate financing terms under compressed timelines, reducing leverage and increasing costs.

Title or easement issues discovered during closing

Title and access issues identified late in the process can delay or derail closings entirely—often at significant expense.

Conclusion: Using legal counsel strategically

Legal counsel should be viewed as a strategic partner, not an obstacle. Early, targeted involvement allows issues to be addressed efficiently, preserves flexibility, and keeps transactions moving forward.

The most successful commercial real estate transactions are those where legal timing aligns with business objectives. Knowing when to involve counsel—and when limited involvement is appropriate—helps protect value, manage risk, and maintain momentum throughout the deal.