Commercial Investment Real Estate November/December 2018 | Page 21

strategy of an unscrupulous buyer. Either way, establish a process for confirming that escrow deadlines are met. Negotiate Default in Your Favor A shrewd seller will be cautious of allowing a buyer to seek specific performance in the event of seller default because not all defaults are intentional. For example, a seller could be held in default for failing to deliver marketable title if a lien is filed and the seller was unaware of it. In this case, the seller needs to keep options open for terminating the agreement. If you have the negotiating leverage, include a provision that gives you the right to back out of the contract with the only rem- edy for the buyer being the return of earnest money. Most buyers will insist on more severe consequences for the seller because the buyer already may have racked up fees for lawyers, accountants, and due diligence inspections. A more realistic and fair remedy that still gives the seller flexibility is one that allows for payment — with a cap — for these buyer expenses. It’s always better to build in flexibility to avoid pitfalls that can occur, even when both parties are acting in good faith. A strong default provision increases the seller’s negotiating power on other issues. Think Ahead on Estoppel Letters Buyers frequently want estoppel letters from tenants to confirm their lease commitments. The estoppel letter doesn’t change the terms of a lease, but confirms the existing rent, deposit, and other obligations of both parties. Sales agreements often are contingent on obtaining estoppel agreements from all or most tenants. A few stubborn tenants can complicate a deal, and astute sellers should limit the number of estoppels required to 80 to 90 percent of existing tenants. Look at the Whole Picture Brokers are the experts at getting to “yes” in a deal, while lawyers council their clients regarding potential risks — hopefully con- templating all possible outcomes. It’s a good combination for cli- ents, and well-drafted sales agreements will provide protections without unreasonable provisions that jeopardize a deal. To have a smooth closing, make sure everyone is aware of the fine print. Stephanie Friese, JD, is managing partner of Pursley Friese Torgrimson in Atlanta, where she represents commercial real estate clients across the U.S. in both transactional and litigation matters. Contact her at [email protected]. Life with The Pin CCIM Institute provides its members with the most sophisticated knowledge, technology, and operational platform to power their business. CCIM Membership Benefits: Lifelong Learning STDB Free and discounted courses covering crowdfunding, big data, and more. The industry’s best digital toolkit for market analysis. FindaCCIM.com and CCIM Connect CIRE Magazine Subscription An exclusive global network for business and industry intelligence. The award-winning publication that covers market trends and innovations. Affinity Provider Program DealShare Exclusive discounts on travel, tech tools, printing, and more. A database of listings not found anywhere else. Experience life with the pin. Visit www.ccim.com/benefits CCIM.COM November | December 2018 19