The purchase and sale agreement (the “PSA”) is the central document for the sale of commercial properties and one of the most important. The terms of the agreement are often negotiated between the buyer and the seller after the signing of a Memorandum of Understanding (“LOI”), although the parties may sometimes waive a LOI and go directly into the PSA. With regard to good practice, legislation should be used to ensure that the parties agree on the basic terms of the sale before time and energy are invested in the EPI negotiations, which is often a long and lengthy process involving several rounds of review before reaching an agreement acceptable to both parties. Section 1031 (a) (1) provides for a departure from the general rule requiring recognition of profits or losses in the sale or exchange of property. In accordance with Section 1031, Point (a) (1), no profit or loss is recorded when real estate held for production purposes in a business or business or for investments are exchanged exclusively for real estate of the same nature, which is held either for their productive use in a business or for investments. In accordance with Section 1031, Point (a) (1), real estate held for production purposes in a commercial sector or business may be exchanged for real estate that is considered investment. Similarly, under Section 1031, Point (a) 1), real estate held for investment purposes may be exchanged for real estate held for production purposes in a commercial sector or business. As the parties move towards the closing of the trust, the buyer`s lawyer should prepare the final instructions out which documents a seller must put in trust before the balance of the purchase money can be transferred to the seller. Some buyers want a right to extend the closure of the trust and sellers are more sensitive to this option if the extension right requires the buyer to place an additional deposit in trust. It is preferable to obtain a renewal option during the law or PSA negotiations, since a seller is not required to accept an extension of the fence if it is not part of the agreement. A seller who refuses to modify the PPE for an extension of the fence may cause the buyer to close in time or delay the buyer, compromising the buyer`s down payment. A final indication at the close of the trust fund are the closing costs that are generally allocated according to county practice, but sometimes the parties agree to allocate them by other means.
In both cases, the purchaser should ensure that PSA accurately reflects the party responsible for these costs and that the settlement statement is in compliance with PSA. Make #5: Get Estoppel certificates from tenants. Although this step is common for national tenants, you should keep in mind that some national tenants charge $500 or more for these certificates. These costs should be included in the sales contract. In addition, some national tenants have up to 21 days to present an Estoppel certificate that could delay the closure. It is tempting to avoid asking for estoppel certificates from smaller tenants, such as in a strip mall, but this is the best way to confirm whether the seller/owner has lived until the end of the existing lease and whether the landlord is obliged to do land work.