Commercial Purchase Agreements

What a well-drafted purchase agreement does

A commercial purchase agreement is more than a description of price and parties. It allocates due diligence risk between the parties, defines the closing conditions and the consequences of failing to satisfy them, addresses environmental liability and pre-existing conditions, governs the treatment of leases and tenant matters during the inspection period, deals with prorations and adjustments at closing, and structures earnest money and remedies for default.

Standard issues we negotiate on every commercial purchase agreement include the inspection period and the buyer’s termination rights during it, title objection procedures and the seller’s cure obligations, the form of deed and the survey requirements, environmental representations and the scope of any indemnity, the treatment of existing leases and tenant estoppels, prorations of taxes and operating expenses, the assignment provisions if the buyer wants to take title in a different vehicle, the closing conditions and the calendar leading to closing, and the remedies available to each side if the deal doesn’t close as scheduled.

Different deals, different documents

A commercial purchase agreement for a single-tenant net-leased property is structurally different from one for a multi-tenant office building. Both differ from a vacant infill parcel that’s being assembled with two adjacent properties. Letter-of-intent stage drafting differs from the binding agreement. An entity-level transaction (purchase of LLC interests) differs significantly from a fee transaction (purchase of the real estate itself), with different tax, liability, and consent implications.

The right form is the one that fits the specific deal, not the one the prior firm used last time. We draft purchase agreements that fit the specific transaction, including coordination with related agreements (assignment of leases, environmental indemnities, escrow agreements, post-closing service contracts) and integration with the financing structure when the buyer’s lender has specific requirements.