Originally published in Blakes Bulletin on Commercial
Real Estate, September 2009
The paperwork for the transaction should reflect both the new
realities of the marketplace and any preparatory work undertaken by
the vendor. Purchasers are likely to be price-conscious,
conservative, value-oriented and wary of vulnerable markets or
property classes. The heady days of multiple bidders willing to pay
higher than list price are gone. Agreements for the purchase and
sale of commercial properties must be reasonable, incorporate
sufficient time periods and reflect a middle ground between the
interests of vendors and purchasers.
Often, particularly if a real estate broker has been engaged by
the vendor, it will be useful for the vendor and its broker to
assemble the results of their preparatory work with respect to the
property in a confidential information memorandum (CIM) to be
delivered to prospective purchasers. A CIM typically discloses
certain basic information with respect to the geographic market,
the property for sale and the proposed offering process.
Confidential rental information is usually included, so it is
important from the vendor's perspective to couple the delivery
of the CIM to prospective purchasers with a comprehensive
confidentiality agreement. To the extent that the vendor has
undertaken additional searches or investigations with respect to
the property as part of its pre-sale planning, the results of these
searches can and should be disclosed in the CIM. The CIM should
make it clear that the information set out in it is being provided
strictly for the convenience of prospective purchasers and is not
to be relied upon.
Letters Of Intent
Letters of intent have traditionally formed an element of
negotiating purchase and sale agreements once the purchaser has
been identified. Although letters of intent are for the most part
non-binding, they nevertheless serve the important purpose of
bringing the parties together on basic deal points and establishing
impetus for the transaction. Letters of intent disappeared from
many commercial real estate transactions in the hot markets of 2007
and early 2008, but are now back in vogue. Key elements in a letter
of intent include the following:
Identity of the parties, including any contemplated assignment
by the purchaser
Purchase price, including amount and timing for deposits
Any unusual adjustments, such as an interest rate buy-down or
square footage adjustment
Timing for the due diligence period
Timing for closing
Whether representations and warranties will be included and, if
so, their general nature
Any important conditions, such as board approval, financing
condition, mortgage approval, waiver of rights of first refusal,
Threshold for delivery of tenant estoppel certificates
Threshold for termination by reason of damage or
Timing and responsibility for preparing the agreement of
purchase and sale
Agreements Of Purchase And Sale
The critical element in preparing agreements of purchase and
sale in today's marketplace is to be reasonable.
Notwithstanding this, drafting responsibility (whether for the
vendor's lawyers or for the purchaser's lawyers) continues
to be important, because the manner in which the agreement is
drafted in the first instance can tilt the dynamics and advantage
in the transaction dramatically from one side to the other. Both
the vendor and the purchaser will be interested to ensure that the
transaction proceeds smoothly and efficiently. Provocative drafting
positions, such as adjusting for rent on the basis of payments
actually received or having the representations and warranties of
the parties merge on closing, are to be discouraged. The vendor
should err on the side of making more information available for
review rather than less. Vendor's conditions, such as board
approval or waiver of third party rights, should be avoided and, to
the maximum extent possible, satisfied in advance.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Emotional culture is influenced in great part by the mindset and actions of leadership, although employees also play more of a role than they may realize in creating the culture that exists in the group.
The session will be led by Dr. Robert Brooks, an award-winning author and psychologist. In his presentation, Dr. Brooks will describe the mindset and realistic practices of leaders and staff that help to nurture and sustain a culture characterized by positive emotions, satisfying, respectful relationships, a sense of meaning and ownership for one’s work, and enhanced job performance. Examples will be offered to illustrate strategies for developing a positive emotional culture in an organization.
Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.
Ready? The company wants its in-house lawyers to be on the front lines, but there is little to no training around how to “look for risk,” let alone how to evaluate it or report it. Our special guest, Sterling Miller, will present simple ideas and processes you can use to spot and identify risk, and demonstrate how to evaluate and manage that risk alongside the business.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).