Independent review of commercial transactions in Michigan, addressing the compliance issues, due diligence standards, and professional conduct requirements specific to commercial real estate.
Submit a Commercial MatterCommercial real estate oversight is not just residential oversight applied to bigger deals. The standards differ, the due diligence requirements are more extensive, the parties are typically more sophisticated, and the compliance landscape is meaningfully different from the residential context. Coventry Enterprises LLC has developed specific review protocols for commercial transactions that account for these differences.
Detroit's commercial real estate market has gone through significant changes over the past decade. The city's revitalization has created real commercial investment opportunity, but it has also created situations where commercial properties were marketed with incomplete or misleading information, where environmental history was not adequately disclosed, and where transaction parties on both sides lacked the information they needed to make properly informed decisions.
Jack Bodenstein expanded the committee's commercial review capacity after observing that the same patterns of inadequate disclosure and professional conduct failures that appeared in residential transactions also appeared in commercial ones, sometimes in higher-stakes form.
Michigan's commercial real estate market has specific regulatory requirements and common compliance issues that the committee's reviews address.
Michigan has a comprehensive environmental cleanup program under the Natural Resources and Environmental Protection Act. For commercial properties, particularly in Detroit's industrial neighborhoods, environmental conditions are a material consideration. Sellers of commercial property with known or suspected environmental contamination have disclosure obligations under Michigan law, but the framework differs from the residential disclosure act.
The committee reviews whether sellers of commercial properties provided adequate disclosure of known environmental conditions and whether buyers were advised to conduct appropriate environmental due diligence. A Phase I Environmental Site Assessment is standard practice for commercial transactions. When one was not conducted or recommended, the committee evaluates whether that omission was appropriate given the property's history and location.
Commercial buyers frequently acquire property for a specific intended use. Michigan municipalities have zoning ordinances that control permitted uses in each zoning district, and some uses require special use permits or variances. A commercial buyer who does not verify that their intended use is permitted may discover after closing that they cannot legally operate their business in the building they purchased.
The committee evaluates whether zoning verification was conducted as part of due diligence and whether representations made about permitted uses were accurate.
For commercial properties sold as income-producing investments, the accuracy of financial representations is a central concern. Occupancy rates, rental income, operating expenses, and lease terms should be accurately represented in marketing materials and purchase documents. Misrepresentations about income property financials have appeared in a number of Detroit-area commercial transactions, and Coventry Enterprises has developed specific review criteria for these situations.
The committee examines whether rent rolls were accurate, whether lease terms were as represented, whether material vacancies were disclosed, and whether expense figures provided to buyers were consistent with actual property operations.
Commercial real estate brokers in Michigan are licensed under the same LARA framework that governs residential brokers, but the specific conduct issues in commercial transactions often differ. Conflicts of interest, dual agency arrangements, and representation of both buyer and seller in the same transaction are more common in commercial deals and create specific compliance concerns.
The committee reviews whether commercial brokers disclosed all conflicts of interest, whether dual agency arrangements were properly disclosed and consented to, and whether brokers provided competent and honest representation to their clients.
The specific characteristics of Detroit's commercial real estate market have shaped the committee's commercial oversight priorities. The city has a large inventory of former industrial buildings, many of which have been adapted for new uses: lofts, creative office spaces, breweries, restaurants, and mixed-use developments. These adaptive reuse transactions are common in Detroit and bring specific compliance challenges.
Environmental history is almost always relevant in Detroit industrial conversions. Building condition and permitted use questions arise in virtually every adaptive reuse deal. Title complexity, including former industrial owner chains and old easements or restrictions, is common. The committee has developed depth in reviewing these specific transaction types.
Detroit's Opportunity Zone designations and other tax-advantaged investment structures have also attracted investors unfamiliar with the local market. The committee has seen commercial transactions in which investors were provided inaccurate information about properties in these programs. Overstated condition, inflated pro forma income projections, and misrepresentations about development timelines have all appeared in transactions the committee has reviewed.
A commercial transaction review by Coventry Enterprises LLC examines the full document record of a commercial deal with commercial-specific review criteria applied. The review covers:
Related services include due diligence review and risk assessment. For residential transaction oversight, see the residential oversight page.
Yes. The committee reviews both residential and commercial real estate transactions in Michigan. Commercial review protocols reflect the different standards and due diligence expectations that apply to commercial deals, including environmental assessment requirements, income property representation analysis, and commercial broker conduct review.
Michigan's Seller Disclosure Act applies to residential transactions, not commercial ones. Commercial transactions are governed primarily by contract law, meaning what sellers are obligated to disclose depends largely on what the purchase agreement requires and on the general duty not to fraudulently misrepresent material facts. This is why commercial due diligence, and the buyer's obligation to investigate, carries more weight in commercial transactions than in residential ones.
A Phase I ESA is an investigation conducted by a qualified environmental professional to identify recognized environmental conditions at a commercial property. In Michigan, conducting a Phase I that meets ASTM standards is a prerequisite for certain environmental liability protections under state law. The committee views a Phase I as standard practice for any commercial transaction and evaluates whether one was conducted as part of commercial due diligence review.
Common red flags include undisclosed environmental history on former industrial sites, inaccurate income projections for investment properties, zoning classifications that do not permit the buyer's intended use, title issues from industrial ownership chains, and brokers with undisclosed conflicts of interest. The committee's Detroit market experience gives it a specific understanding of where these patterns concentrate.
Yes. The committee reviews commercial transactions from the perspective of any party with a legitimate concern. Sellers sometimes face situations where buyers have made claims about the transaction that the seller believes are inaccurate. Independent review of the transaction record can document what actually occurred and what the evidence shows.
Contact Coventry Enterprises LLC to discuss whether a commercial transaction review is appropriate for your situation. The committee evaluates scope and documentation at no obligation.
Contact the Committee Residential Oversight