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Self billing agreement template for Sales

ron from ronald law and together with acre adventures in commercial real estate legal section we're going to walk you through this office purchase and sale agreement hey everyone spencer burton here allow me to introduce ron rohde he is our acre legal contributor and he'll be sharing a walk through of one of his real estate legal documents so this agreement is a pretty neutral form i think i've tweaked some of the timelines and some of the provisions but it's generally pretty neutral between buyer and seller so if you want to download it you can make those changes to benefit your party or who you're representing on the transaction but we're going to just walk through and i'm going to talk through the clauses what are general numbers in this market that are reasonable what are changes we can make what changes affect other parts of the document as well as just kind of a general checklist for what you're going to look for on an office acquisition now i note that i didn't include some of the exhibits like an snda i really like to include a form of estoppel certificate in the psa but there's another video for that so you can either kind of combine them into the same document but that's just a general tip that we'd like to see as many form of documents that we're going to require just to make sure that the copies you get back prior to closing are forms that are acceptable to you and your legal counsel so let's get started so here we just have a title that's pretty generic here uh improved property office you want to put your seller entities including the type state same for the purchaser this can be and or assigned so this one doesn't have that you know we can also put that in to allow the purchaser to assign no problem so sale of property is subject to the term so it agrees to sale and purchaser agrees to purchase this is pretty important um you know in office i consider it kind of a middle ground so you want the dirt you want the improvements you want the fixtures you want everything that's not accepted out from purchase money liens so like seller financing on capital equipment that has not subject that the landlord has agreed is not subject to it so that's not conveyed and this intangible personal property this is what i was talking about if you watch some of my other videos where i talk about multi-family it's incredibly important that you purchase all of the websites all of the marketing collateral the trade names the photographs there's becoming increasingly a focus on intellectual property that's conveying along with even multi-family properties office i would say it's kind of in between you know just because you have ron roadie's office complex people are not necessarily buying it and knowing that building around roadie's office so while there is a focus more on multifamily i think it is starting to come over to office and retail to a lesser degree so unit we define everything this are very broad this one is good improvements we usually put the common name again you know ron rhodes office building as it's known on the street personal property here we see this with a lot of offices where you know we're responsible for fixtures you have a common area to maintain you have light bulbs you have cleaning supplies you may have a golf cart you have doors you have handles i mean you've just got lots of inventory and spare parts and that's you know probably on the same level as a multi-family but some offices i think that they tend to stock more of these fixtures just because it's mission critical to replace and repair certain fixtures in that building so personal property intangible here you know we talk about the trademarks telephone numbers websites there's a lot of intangible personal property that you should talk to your lawyer about expanding this section to include passwords google my business listings i mean there's so many little things that are important and maybe a buyer expects but if it's not in the contract the seller is not obligated to transfer that over to you leases again they're going to sign those leases closing date date of this contract this one's pretty quick it's kind of normal i think it's a 60 plus 15 days or 30 plus 15 days close you can change that to 60 45 you know office is not in huge demand regulation here we have title company so a tip again in your every purchase agreement you want to make sure that the escrow agent or whoever's holding your funds and the title company is a party to the contract you want to make them liable under the contract sign on the line that is dotted that's a little glenn gary ross reference for you guys if you know what that is uh purchase price payment uh cash good funds okay um independent consideration don't always need this um we have this but but it's not necessary survey title commitment so within seven days you may already have a pre-commitment uh if not you're gonna have to update that for the the title company and this is really important you have the title commitment plus all of the supporting documents and a lot of times these are hyperlinked in one pdf but they may not be some people still attach them as separate pdfs and again you have seven days so this review period is critical i think seven days is pretty pretty normal pretty medium i've seen them as short as like three or four and as long as closing day they could be 30 days they can be 15 days they can you know be all the way up until closing date sellers shall have 10 days so that's a little bit long to cure period if they don't then the the purchaser can terminate within three days after expiration of care and so again this is your remedy a lot of clients come in and say ron there's something on the title we've objected to it seller doesn't want to fix it how can we make them fix it how can we get a discount for that and i say you can't your options are to just waive it waive the exception or close there's really no middle ground so inspection period five days you know seller will provide inventory hvac i just i just threw that in there hoa if there is assignable warranties this one's pretty important i really like it when i can get as built plans it really helps you plan and get some interior dimensions and spaces all leases including any amendments and we talk about later the estoppel obligation so we have a 30 day so yeah it's 30 plus 15. again 48 hours for access to the property is pretty normal it's buyer friendly if it's down to 24 hours um two days is is probably fine let me see if this one has a clause you know usually seller will have a right to be present but not required to um so i don't know if we have that in here but it's just pretty common a seller shall have the right to be there but but not necessarily uh title policy um again just talks about how clean it has to be leases are in full force no unpaid bills this is really important for office where you may have a large ti balance that is being recovered and so that should be clearly outlined in the estoppel of hey landlord owes me x for these ti improvements these tenant improvements that i've paid for and now landlord is supposed to reimburse me but now he's selling the building this will become a new landlord obligation if it's on a schedule or you know you would push the seller to reimburse the tenant prior to closing so they can the tenant can now sign the estoppel and you can get it inherit a good tenant that is at a zero balance as is conveyance so no no express or implied warranties pretty standard it's not the worst i've seen and certainly not not the weakest either you can put brokers in here i usually don't like to put the actual monetary terms we just identify the brokers and then they have a separate agreement with the buyer or the seller that's pretty common and it keeps it keeps the broker commission debates outside of the psa because it's really not relevant to the psa it's really just the purchase price and how are you going to pay the broker um usually it's subject to a separate agreement so if the broker needs to sue a party they can do that without dragging this psa into the lawsuit condemnation casualty these are pretty important and and we do look at this um because we define a material portion so you can see that these two clauses only have material portion i don't love that clause but it is neutral it doesn't really favor one side or the other a better um a better phrase is if we do it here on before more than you know 200 thousand dollars portion of the property right so you put a monetary threshold because then you can actually obtain estimates then you can get a general contractor out there to tell you is this two hundred thousand dollars yes or no here's my bid and here's why and it's a factual representation as opposed to material well material is just always open to to negotiation so here if it can't be restored you know you got to give notices so again we're really active in case something happens you need to read this clause and understand it and so if you're the seller you know you want to lower or you want to increase that material threshold so that the purchaser does not have the right to terminate even if a million dollars worth of damage gets occurs you can either force the buyer to close by assigning the insurance proceeds you can give them a discount you can you know fix it you can restore the property prior to close but even if it's a high amount and you know you can still force the buyer to close you don't let them terminate get their earnest money back for such a minor damage date of closing so we have here 15 days after dd special warranty is pretty common sometimes you can get a general not always i don't think it's necessary bill of sale that's that's for all of the personal property all the leases security deposits you know keys and that's kind of minor but again software you know if you have digital locks if you have a software system uh castle you know remote entry you need to explicitly get the transfer of that agreement you need to get authorization um to be able to access that new software to ensure that your property manager or yourself yourself managing can seamlessly access all of the the doors and you understand how to use that software and the hardware of this building you're buying so assignment assumptions tenant notice letters so this one we have it attaches an exhibit i think it's exhibit sounds b uh ferpta again the ferpta is the foreign buyer requirement that is a obligation of the buyer to withhold funds and remit estoppel letters 15 days prior no problem purchase price notices you know purchaser is pretty simple um adjustments though just prorations right for property taxes or any other ad valorem taxes uh purchase will be credited you know that's kind of a question i get a lot sometimes buyers say is the seller going to write me a check for the deposit do i need to keep those in a separate account no you you don't have to um segregate those deposits um there's not going to be a separate transaction you just get a credit and then you're expected to pay the tenant this obligation so all the meters final bills that's fine um seller shall remit you know rents or prorated income this one is interesting um you know if it's not prorated then they can remit to the seller if it's for past rent but at some point there has to be a cut off and the purchaser doesn't have an infinite duty to always reimburse at some point if they get money for unpaid rent that was due during the seller's ownership the purchaser just gets to pocket that money because it's considered like an old debt i would consider it written off from the seller's point of view and the purchaser no longer has a duty to remit this this was actually a really hotly debated clause during covid because you had a lot of tenants who were behind but would likely get money in the near future from some of the relief programs sba ppp whatever and so if you had a transaction you might have a little bit in arrears but you'd say for six months i want the purchaser to promise to remit to me any rent payments that are applicable to the past due rent if the tenant was going to get a influx of money and so we were debating a lot of those the amounts the timing the accounting record reporting requirements all this stuff um so just just something to consider if there are any arrears or likelihood that the tenants will pay for past rent that was due during the seller's ownership but is received post-closing so here purchaser will pay for the owner's policy that's fine everybody pays their own attorneys that's great sellers default you know you can terminate that's fine and get your money back or specific performance that's that's pretty critical you usually have ore you don't get to do both but return of earnest money um all right purchaser default your your seller's remedy is just liquidate damage you keep the deposit um that's good miscellaneous section these are all pretty generic uh notice notices this isn't critical you know i i oftentimes i don't see the email section filled out i don't see a telephone number i would just suggest that you fill it out you know as best you can and add a a with a copy to and here you know we're usually putting say the attorney contact information and then what's what's interesting is do you require the notice to go to this address as well for notice to be sufficient or not and so some contracts will require a copy to the purchaser as well as a copy to the seller's attorney and others don't so just depends on what you want because the the cut goes both ways and it can punish you as well as them here parties agreed to notice via electronic mail super important you know do you want to do email or do you only want to do hard copy entire agreement 90 days that's very very short maybe i should say this is seller friendly but representations and warranty 90 days is nothing that's going to go by in a heartbeat um electronic signatures time is of the essence business day definitions great attorneys fees these are all pretty boilerplate you know i've got dallas because that's our hometown that's where we live um you know execution day that that should be when it's signed um so uh not as critical we have you know a place for the survey just so we're very clear on what the legal description is and then the survey that matches that legal description for what parcel we're buying tenant notice letter again some of the other exhibits that i've had we will include snda forms estoppel certificates and check out those other videos if you want to see what those forms look like but that's it for an office so if you're interested in purchasing or selling an office building contact ronald ready law and we'd be happy to walk you through this transaction thanks guys