Reps & Warranties: Real Property
Essential Question:
What property is included in the transaction, and is there any reason the Business couldn’t continue to operate out of the same space post-close?
In Brief:
Property owned or leased included in the transaction.
Information on the condition of the property and compliance with laws.
Category: Continued Diligence & Fact-Finding; Risk Allocation
What is it?
Is there owned property coming as part of the transaction? Is there rented property? Is the business itself a lessor? Is there some reason that the business could not continue functioning in the same space that it has been? These assertions also include statements on the condition of the property, compliance with laws in relation to ownership and use, regulatory components, zoning, possession, easements, licenses, etc. And, if you’re leasing, what are you leasing, can you provide copies of the lease, are you or have you ever been in breach, is your landlord in breach?
When does it matter?
As a Seller, if you are doing something in a highly regulated industry, there’s some overlap between this and other reps – you’ll have more reps around the use and condition of your property that may show up in other ways elsewhere.
What to look out for?
Pay attention to what might be represented related to real property here vs. what might be included in other parts of the purchase agreement.
