Commercial Property - purchase and sale transactions - Alberta - broker focus

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Legal Aspects of Commercial Property Purchase and Sale Transactions in Alberta Canada -presentation to commercialk property brokers

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Commercial Property - purchase and sale transactions - Alberta - broker focus

  1. 1. COMMERCIAL PROPERTYPurchase and Sale Transactions Presented by: Peter Collins, Partner
  2. 2. SEMINAR OBJECTIVESLearn about:• Major steps in commercial purchase and sale transactions• Critical business points to address• Practical issues 20 June 2012 © Field LLP 2012 2
  3. 3. TOPICS1. Papering the deal2. Due Diligence Investigations3. Financing4. Environmental5. Tenants20 June 2012 © Field LLP 2012 3
  4. 4. Topics, continued6. Reps and warranties7. Liability and indemnity8. Real Property Reports/title insurance9. Getting to closing10.After Closing20 June 2012 © Field LLP 2012 4
  5. 5. PAPERING THE DEAL• Contract Law Refresher• Three main ways to paper a deal20 June 2012 © Field LLP 2012 5
  6. 6. Contract Law Refresher• Statute of Frauds• Caveat Emptor• Fraud/Misrepresentation• Patent and Latent Defects• “As is”• Entire Agreement20 June 2012 © Field LLP 2012 6
  7. 7. Three Ways to paper1. Letter of Intent2. Short Form Agreement3. Formal Agreement20 June 2012 © Field LLP 2012 7
  8. 8. Letter of Intent• Preliminary – contemplates further document• Binding or non-binding? Or both?• Transition to formal agreement20 June 2012 © Field LLP 2012 8
  9. 9. Short Form Agreement• Skips LOI stage• Can function as a stand-alone agreement• Risks arising from short form 20 June 2012 © Field LLP 2012 9
  10. 10. Formal Agreement• Can be preceded by LOI of short form• Best form of agreement• Negotiation and timing issues• Form of Agreement – AREA form – Custom form20 June 2012 © Field LLP 2012 10
  11. 11. DUE DILIGENCE INVESTIGATIONS• Description• Critical for a buyer• Scope of due diligence• Responsibility for due diligence• Cost and disclosure to seller• Condition Precedent in PSA20 June 2012 © Field LLP 2012 11
  12. 12. FINANCING• Buyer condition precedent?• Scope of discretion• Lender due diligence• Lender environmental concerns• Timing20 June 2012 © Field LLP 2012 12
  13. 13. 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 20 June 2012 © Field LLP 2012 13
  14. 14. TENANTS• Lease reviews as part of due diligence• Affects financing• Estoppel Certificates• Adjustments for op costs, taxes, deposits and prepaid rent20 June 2012 © Field LLP 2012 14
  15. 15. 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 property20 June 2012 © Field LLP 2012 15
  16. 16. R&W, continued• Lease/tenants status• Third party claims• Expropriation, condemnation, work orders• Zoning• Location compliance• Assumed service contracts20 June 2012 © Field LLP 2012 16
  17. 17. R&W, continued• Condition of chattels, building systems• Canadian Residency20 June 2012 © Field LLP 2012 17
  18. 18. LIABILITY• Relation to R&W• Liability period• Deductible/threshold• Notification• Direct vs. Third Party20 June 2012 © Field LLP 2012 18
  19. 19. INDEMNITY• Relation to R&W, and liability• Indemnity vs. common law damages• Cap or unlimited20 June 2012 © Field LLP 2012 19
  20. 20. REAL PROPERTY REPORTS• Encroachment disclosure• Municipal compliance• Cost• Get them early!20 June 2012 © Field LLP 2012 20
  21. 21. TITLE INSURANCE• Title deficiencies• Municipal compliance deficiencies• Gap coverage• Cost20 June 2012 © Field LLP 2012 21
  22. 22. GETTING TO CLOSING• Conditions satisfaction/waiver• Closing documents exchange• Financing• Conveyancing/registration• Funds release• Tenant notices20 June 2012 © Field LLP 2012 22
  23. 23. AFTER CLOSING• Commission payment to realtors/brokers• Title and contract updating• Post-closing deliverables• Track issues back to R&W20 June 2012 © Field LLP 2012 23
  24. 24. CLOSING THOUGHTS• Realtor’s role – continuous• Communication is key• Track and monitor dates and progress20 June 2012 © Field LLP 2012 24
  25. 25. Questions?20 June 2012 © Field LLP 2012 25

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