Real Estate Tip – Commercial Purchase & Sale Agreements: The Basics Meet Today’s Market
A recent American Bar Association article brought to light issues regarding purchase and sale agreements in the context of a fast-moving, modern market place. Distilled from their discussions are the following reminders for buyers, sellers, brokers and lawyers:
- Consider imposing update notice requirements and freezes for information posted to the transaction’s electronic data room. Electronic data rooms are increasingly common. Buyers need to be notified of updated information and no new information should be posted for a certain number of days before the closing to avoid last minute surprises and oversights.
- Buyers should recognize possible limitations on sellers’ ability to provide estoppel agreements from tenants. Consider negotiating a limitation on the number of estoppels based on square footage rented, narrowed further for estoppel updates. For updates use a short form update rather than a new full estoppel agreement.
- Sellers want to limit the dollar amount they pay post-closing if there is a covenant, warranty or representation violation. In addition to a maximum amount for such claims, consider a minimum amount to insulate the seller from nuisance assertions.
- Be prepared to deal with sellers that are unwilling to provide a rent-roll on the theory that the buyer has all of the leases to review. Buyers may acquiesce but want estoppel agreements, representations and perhaps tenant interviews.
- Negotiate provisions to deal with uninsured and underinsured losses that occur before closing.
These considerations are only a few of the scores of issues a well-drafted purchase and sale agreement will include. Be certain to engage counsel familiar with the ever-widening array of topics that may be critical to the success of your transaction.
Today’s real estate tip is brought to you by Rick Smith, a LEED Accredited Professional and member of Bernstein Shur’s Real Estate Practice Group and Green Building Team. Stay tuned for more useful tips for real estate professionals.
For more information, contact Rick at firstname.lastname@example.org or 603 623-8700 ext. 8829 or 207 774-1200.