Tactics to watch for in a commercial deal

Most people you'll deal with in a commercial deal are straight with you. A few aren't. These are moves I've seen described and seen attempted, written from the other side of the table: what each one looks like, and how to protect yourself. I don't use them, and I'd rather you spot them early.

None of this is legal advice. If you think one is happening to you, talk to a lawyer before you sign or pay anything.

1. “Your lender requires it”

Someone tells you a lender, a bank or a rule forces your hand: a quick close, a lower price, a particular lawyer or appraiser. Sometimes it's true. Sometimes it's pressure dressed up as a rule.

What to do: Ask for it in writing, from the lender itself. Call your own lender or mortgage broker and check. A real requirement survives a phone call. Source: BC Financial Services Authority.

2. Hidden debt behind a deal

A buyer or seller has a second mortgage, a private loan or an unregistered arrangement that the other side and the lender don't know about. It can surface after completion, when it's expensive to fix.

What to do: Your lawyer searches title through the Land Title and Survey Authority (LTSA) and, for a business, the Personal Property Registry. Ask in the contract for a statement that there's no other financing, and have your lawyer decide whether a statutory declaration at closing makes sense. Source: Personal Property Security Act (BC Laws).

3. A borrowed down payment the lender isn't told about

A buyer borrows the down payment on an unsecured loan and doesn't disclose it. The deal looks safer than it is, and if things go sideways, everyone tied to the purchase can be dragged in.

What to do: If you're the seller, be wary of a buyer whose financing story keeps changing. If you're the buyer, disclose your sources to your lender. Misleading a lender can have serious legal consequences. Source: BC Financial Services Authority.

4. Marketing that's too clean

Listings, pitch decks or websites that look perfect: hand-picked reviews, polished projections, “guaranteed” returns. Removing bad reviews or making false claims in advertising can break the Competition Act.

What to do: Read the actual documents, not the brochure. Check reviews on more than one site. Treat projections as opinions until you've seen leases, statements and tax returns. Source: Competition Bureau: deceptive marketing practices.

5. Passive investment pitches and finder's fees

Someone invites you to put money into a property deal as a passive investor through social media, or offers you a fee for bringing in investors. Raising money from investors in BC generally falls under securities law, which needs a prospectus or an exemption, and being paid to find investors can require registration.

What to do: Check the person and the offering with the BC Securities Commission before you invest or accept a fee. Ask which exemption they rely on. If the answer is vague, walk away. Source: BC Securities Commission: investors.

6. Steering the inexperienced

Some promoters prefer new investors because they ask fewer questions and accept worse terms: higher fees, weaker rights, less information.

What to do: Get your own lawyer and accountant, not the promoter's. Ask what experienced investors in the same deal got, and compare. Source: BC Securities Commission: investors.

7. Fees and markups you didn't see

A property or investment is sold to you with a markup or extra fees built in, and nobody points them out.

What to do: Ask for every fee, commission and markup in writing, and who receives it. BC licensees have disclosure duties about their remuneration, and you can ask for it. Source: Real Estate Services Rules (BC Laws).

8. Leaning on the appraiser

Someone tries to steer an appraisal, high to support a loan or low to lower a price or an estate value. Appraisers are supposed to be independent.

What to do: If you hire the appraiser, give them facts, not a number. If an appraisal surprises you, ask for the comparables used and get a second opinion from someone with no stake. Source: Real Estate Services Rules (BC Laws).

9. Capital items booked as repairs

An owner books a new roof or major system as a repair instead of a capital cost. It can understate the building's real costs or misstate income, and Canada Revenue Agency (CRA) has rules on which is which.

What to do: When you buy, read the expense history closely, ask for invoices for big items and have an accountant look at how they were treated. The CRA page on current vs capital expenses explains the difference. Source: CRA: current or capital expenses.

10. Known problems left out

A seller or landlord knows about a leak, contamination or a structural issue and doesn't mention it while you negotiate.

What to do: Ask direct written questions, get inspections and, for older industrial sites, an environmental assessment. Your lawyer can tell you what the seller must disclose and what protection the contract should give you. Source: Site remediation (Government of BC).

11. The high offer that shrinks

A buyer offers more than they mean to pay to win the deal, then uses inspection findings to cut the price just before subjects come off, when the seller has stopped talking to anyone else.

What to do: As a seller, look at the buyer's history and financing, keep subject periods short and specific, and consider backup offers. As a buyer, don't do it: it burns trust, and the market remembers. Source: Commercial Tenancy Act (BC Laws).

12. The fake deadline

Someone claims another offer is about to land or the price goes up tomorrow, to stop you from checking things.

What to do: Ask for the deadline in writing and the reason behind it. Stick to your process. In BC, licensees must not mislead anyone about other offers. Source: Real Estate Services Rules (BC Laws).

13. The anchored price

A first number is thrown out far from reality to make everything after it look reasonable.

What to do: Do your own valuation before you talk numbers, and answer with evidence such as comparables and a rebuilt net operating income (NOI, the income left after running costs), not with a split-the-difference counter. Source: BC Assessment.

14. Nibbling after agreement

Small extra asks show up once a deal is agreed: a fixture here, a later date there.

What to do: Write the whole deal down at once, and trade every new ask for something of equal value. Source: Real Estate Services Rules (BC Laws).

15. Rent roll gaps

Free rent, side deals or tenants in arrears don't show up in the rent roll.

What to do: Ask for estoppel certificates and compare leases with bank deposits. Source: Commercial Tenancy Act (BC Laws).

16. Undisclosed defects

Known problems aren't mentioned, or are painted over.

What to do: Ask direct written questions about known defects and get a building condition assessment. Licensees have duties around material latent defects. Source: BCFSA: material latent defects.

17. Pro forma presented as fact

Projected income is presented as if it were current income.

What to do: Ask for actual statements and treat projections as a sales pitch until you've tested them. Source: Real Estate Services Rules (BC Laws).

18. Investment pitches that look like securities

You're offered a share of a property with promised returns and few documents.

What to do: Check whether the people involved are registered and whether it's a security. The BC Securities Commission has information for investors. Source: BC Securities Commission: investors.

19. Signing before you're ready

You're encouraged to sign an offer to lease or contract on the spot.

What to do: Take the document away and have a lawyer read it. An offer to lease can bind you. Source: Commercial Tenancy Act (BC Laws).

If something in a deal feels off, slow down and ask. A good deal survives questions. See also the due diligence checklist and subject clauses, and the longer guide to negotiation strategies.

General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.