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Similar to Commercial Property - purchase and sale transactions - Alberta - broker focus (20)
Commercial Property - purchase and sale transactions - Alberta - broker focus
- 2. © Field LLP 2012
SEMINAR OBJECTIVES
Learn about:
• Major steps in commercial purchase and
sale transactions
• Critical business points to address
• Practical issues
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- 3. TOPICS
1. Papering the deal
2. Due Diligence Investigations
3. Financing
4. Environmental
5. Tenants
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- 4. Topics, continued
6. Reps and warranties
7. Liability and indemnity
8. Real Property Reports/title insurance
9. Getting to closing
10.After Closing
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- 5. PAPERING THE DEAL
• Contract Law Refresher
• Three main ways to paper a deal
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- 6. Contract Law Refresher
• Statute of Frauds
• Caveat Emptor
• Fraud/Misrepresentation
• Patent and Latent Defects
• “As is”
• Entire Agreement
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- 7. Three Ways to paper
1. Letter of Intent
2. Short Form Agreement
3. Formal Agreement
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- 8. © Field LLP 2012
Letter of Intent
• Preliminary – contemplates further
document
• Binding or non-binding? Or both?
• Transition to formal agreement
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- 9. © Field LLP 2012
Short Form Agreement
• Skips LOI stage
• Can function as a stand-alone agreement
• Risks arising from short form
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- 10. © Field LLP 2012
Formal Agreement
• Can be preceded by LOI of short form
• Best form of agreement
• Negotiation and timing issues
• Form of Agreement
– AREA form
– Custom form
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- 11. © Field LLP 2012
DUE DILIGENCE
INVESTIGATIONS
• Description
• Critical for a buyer
• Scope of due diligence
• Responsibility for due diligence
• Cost and disclosure to seller
• Condition Precedent in PSA
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- 12. © Field LLP 2012
FINANCING
• Buyer condition precedent?
• Scope of discretion
• Lender due diligence
• Lender environmental concerns
• Timing
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- 13. © Field LLP 2012
ENVIRONMENTAL ISSUES
• Significant concern in ALL transactions
• Lender requirements and indemnities
• Phase 1 ESA
• Phase 2 ESA
• Reps and warranties in PSA
• Allocation of Liability
• Indemnification
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- 14. © Field LLP 2012
TENANTS
• Lease reviews as part of due diligence
• Affects financing
• Estoppel Certificates
• Adjustments for op costs, taxes, deposits and
prepaid rent
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- 15. © Field LLP 2012
REPS AND WARRANTIES
• Seller disclosure is the heart of the deal
• Due diligence verifies reps & warranties
• Categories of R&W:
– Corporate
– Title and encumbrances
– History/knowledge
– Nature of operations on property
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- 16. R&W, continued
• Lease/tenants status
• Third party claims
• Expropriation, condemnation, work
orders
• Zoning
• Location compliance
• Assumed service contracts
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- 18. © Field LLP 2012
LIABILITY
• Relation to R&W
• Liability period
• Deductible/threshold
• Notification
• Direct vs. Third Party
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- 19. © Field LLP 2012
INDEMNITY
• Relation to R&W, and liability
• Indemnity vs. common law damages
• Cap or unlimited
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- 20. © Field LLP 2012
REAL PROPERTY REPORTS
• Encroachment disclosure
• Municipal compliance
• Cost
• Get them early!
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- 21. © Field LLP 2012
TITLE INSURANCE
• Title deficiencies
• Municipal compliance deficiencies
• Gap coverage
• Cost
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- 22. © Field LLP 2012
GETTING TO CLOSING
• Conditions satisfaction/waiver
• Closing documents exchange
• Financing
• Conveyancing/registration
• Funds release
• Tenant notices
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- 23. AFTER CLOSING
• Commission payment to
realtors/brokers
• Title and contract updating
• Post-closing deliverables
• Track issues back to R&W
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- 24. © Field LLP 2012
CLOSING THOUGHTS
• Realtor’s role – continuous
• Communication is key
• Track and monitor dates and progress
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