Buying a commercial building in New Mexico: get insurance moving before closing

Photo: McCanna-Hubbell Building, Albuquerque, by John Phelan, May 2010, CC BY 3.0. Resized for this page.

Start with the building and what you plan to do there

Send us the address, the buyer's legal name and your expected closing date. Then tell us who uses the building now and what will happen after you take ownership. If you are planning to renovate an empty space before opening, we need to know that from the start.

A closing date gives us a deadline to work toward, but coverage still needs to be reviewed and confirmed. The seller's policy is not something you should rely on to protect you as the new owner.

Gather the records you already have

The inspection report, seller's property information and recent photos are a good place to begin. Include the square footage, construction type, roof age and any records of electrical, plumbing or heating updates. If you are unsure about a detail, flag it so we can work out what is needed.

For an adobe building or one with older construction, share what the inspection actually says about the walls, roof and updates. A description such as “stucco exterior” does not tell the whole story of how the building was built.

Keep the purchase price, loan balance and proposed insurance limit separate. What you pay for the property is not necessarily what it would cost to rebuild it. Use our commercial building-values worksheet to organize the information for the review.

Check the address and ask about flood coverage

If the property is in Albuquerque, the city's free address report provides zoning and flood-zone information. For a property outside the city, check with the local authority responsible for the address.

Standard commercial property insurance generally excludes flood, so ask about separate flood coverage and when it can take effect. Do that early in the purchase process rather than assuming it can be added on closing day. Also ask how your lender's requirements fit with the proposed coverage.

Explain what happens between closing and opening

You may get the keys in October but not open the business until January. Tell us about that gap, including any empty space, construction and tenants who will remain in the building. We need to review the property as it will actually be used during that time.

If the plan changes, let us know. A delayed closing, a tenant moving out or additional renovation work can change the facts used to quote the insurance. Your contractor and the local building department can help identify permits and code requirements for the work; we can discuss the insurance questions that go with it.

Bring the lender's requirements to the review

Send the insurance requirements from the lender and any relevant leases. If one company will own the building and another will operate the business, identify both. That helps us ask the right questions about named insureds, building coverage, business property and liability.

Before closing, confirm what remains outstanding, who needs to authorize coverage, and the date and time it will begin. A quote is not confirmation that coverage is in place. Ask for confirmation and the insurance documents the lender needs, and let us know if the closing date changes.

Talk with BIG about your property

Call BIG at (612) 712-6407. Tell us what is changing and when you need coverage. If you would rather start online, request a commercial insurance review and we will follow up with you.