The numbers worked on paper.

The cap rate looked solid. The rent roll showed full occupancy. The seller told you the property had good bones and a reliable set of tenants. Your agent pulled comparable properties and confirmed it was priced appropriately for the market.

So you made an offer, it was accepted, and now you are in the due diligence period with three weeks left until closing.

Here is the question nobody in that entire process has actually asked you yet: Have you read the leases?

Not the rent roll summary your agent emailed over. The actual leases. Every page, every addendum, every rider, for every tenant currently occupying the building.

Because buried inside those documents are the provisions that determine what you are truly buying. Some of them may look very different from what the seller described when they were explaining the property.

Buying an income-producing property is a completely different process than buying a home to live in. The legal work is more involved, the documents are more complex, the risks are less visible, and the cost of missing something can show up as lost income, unexpected liability, or a deal that fails to perform the way your projections predicted.

An agent who is excellent at residential transactions is not necessarily equipped to identify every legal issue that can arise in a commercial acquisition. That is not a criticism. It is simply a different area of expertise. Understanding where the real risk exists is what protects your investment before the deal is finalized.

You’re Not Buying a Building. You’re Buying Every Relationship Inside It.

This is the first thing every investor should understand before signing anything. When you purchase a property with existing tenants, you are not just buying the walls and the roof. You are buying every landlord-tenant relationship attached to that property.

Every lease, every obligation, every promise the seller made, and every dispute already developing becomes part of what you are stepping into.

In Michigan, a valid lease survives the sale of the property. You step directly into the seller’s position, and the terms of those leases become your responsibility, not theirs.

The surprises often come from the details hidden inside those documents because a rent roll only shows a number. It does not show the terms behind that number.

Some leases allow tenants to reduce their rent or terminate entirely if a major anchor tenant leaves and occupancy falls below a certain threshold. If that anchor tenant moved out months ago and nobody disclosed it, you could be purchasing a property where multiple tenants have the contractual right to pay less than the rent roll suggests.

Some leases allow tenants to terminate early if their sales do not reach certain benchmarks. That means a lease that appears valuable today could disappear based on business performance rather than a lack of commitment from the tenant.

Other leases may provide one tenant with exclusive rights over an entire category, preventing you from filling another space with a competing business that could have been a strong addition to the property.

The issues do not stop there. A tenant may have the right to sell their business and transfer the lease to someone you have never evaluated. A tenant may have a renewal option locked in at below-market rent negotiated years earlier, reducing the value of the property you are purchasing based on current income. A seller may have promised a tenant improvement allowance that has not yet been paid, leaving you responsible after closing.

None of these issues appear in a summary email. They appear in the leases, if someone knows what to look for.

The One Document That Keeps the Seller Honest

Even a thorough lease review may not reveal the entire picture.

Sellers and tenants sometimes make side agreements that never appear in the written lease. A verbal promise, a rent concession, or a handshake modification may exist without being documented anywhere.

On paper, the tenant may owe full rent. In reality, there may be an understanding that changes the relationship entirely.

The document that helps uncover these issues is an estoppel certificate. It is a signed statement from each tenant confirming the actual status of their lease, including the current rent, lease term, whether the landlord is in default, and whether there are any undisclosed agreements affecting the relationship.

Once a tenant signs an estoppel certificate, they cannot later claim something different from what they confirmed.

That is why obtaining estoppel certificates from significant tenants and making them a condition of closing is an important part of the process. If a seller avoids obtaining them or cannot provide them, that may reveal something worth understanding before your money is committed.

Just Because It’s Been Operating Doesn’t Mean It’s Allowed To

Investors often assume that if a property has operated a certain way for years, that use is automatically protected.

That is not always the case.

A property may have operated under a particular use because it was allowed before current regulations changed. That status may be limited. You may not be able to expand the use, and if the property sits unused for too long during renovations, you could lose the protection entirely.

Before closing, you need clear answers. Is your intended use permitted at the property? Is it allowed outright, or does it require additional approvals? Are there ongoing obligations the seller has been managing that you will now inherit? Is there a zoning change being considered or an existing violation notice?

Do not rely only on your own interpretation of the ordinance. Obtain written confirmation from the municipality. Local officials interpret their regulations, and you want their understanding of the rules, not just yours.

The History You Can’t See From the Street

Another issue that can turn a good investment into a major problem is the property’s environmental history.

This is especially important for properties that have been used for industrial work, manufacturing, automotive operations, or dry cleaning because contamination does not always reveal itself and does not disappear when ownership changes.

Environmental liability can follow the property to the new owner. That can mean cleanup obligations and potential liability for issues the buyer did not create.

Michigan does provide certain protections for buyers who acquire contaminated property without knowledge of the issue. However, those protections require specific steps to be taken before closing, not after.

Miss that opportunity, and those protections may not be available when you need them.

The time to investigate a property’s environmental history is before you own it, while you still have the ability to walk away.

Where the Numbers Actually Come From

This is the point investors need to keep in mind throughout the entire process. The financial projections behind a purchase price are built on assumptions about the leases, zoning, environmental status, and overall legal condition of the property.

If any one of those assumptions is wrong, the numbers supporting the deal can change quickly.

A cap rate based on rental income that a tenant has the legal right to reduce is not the same investment you thought you were buying. It is based on an assumption that may not hold.

Legal due diligence is not a formality happening in the background while financial analysis takes center stage. It is the foundation those financial projections rely on. If the foundation is wrong, the numbers built on top of it are wrong as well.

This is also why the purchase agreement matters so much in an investment property transaction. The seller should make clear written representations that all leases have been disclosed, there are no undisclosed side agreements, rents are current, tenants are not in default, and no tenant is threatening to leave.

Those promises can provide meaningful protection if they later prove to be inaccurate. A seller who refuses to make those commitments or creates unusual exceptions may be revealing information you need to understand before moving forward.

You also need enough time in the transaction to complete this process properly, with the ability to walk away and recover your deposit if the reality of the property does not match what you were promised.

Know What You’re Buying Before the Price Is Locked

At Mavacy, we represent Michigan real estate investors from the initial letter of intent through closing.

We review leases, negotiate purchase agreements so seller promises have meaning, obtain estoppel certificates, evaluate zoning and environmental concerns, and help ensure that what you believe you are buying is actually what you are buying before the transaction is finalized.

Buying an investment property in Michigan should never depend on hoping the spreadsheet was accurate.

The work done before signing a contract is worth far more than the work required after closing, when your options become more limited and more expensive.

Schedule a consultation before you go under contract. Bring the deal, the rent roll, and the leases you have available, and we will help you understand what you are actually buying before you commit.

Mavacy Law. On time, on budget, before you even have to ask.