Surveys are an essential element of any real estate acquisition. Whether it is a residential transaction or a commercial transaction, the purchaser should always obtain a new survey. The only exception is with the purchase of a condominium unit. Since a condominium is a subdivision of air rights, the declaration of condominium already includes a survey of the property and of the unit, and since once constructed the unit does not change in size, a survey is generally not necessary. Review of the recorded declaration of condominium is generally sufficient.
The Federal Deposit Insurance Corporation (FDIC) recently announced a change in the manner in which it sells real property. As of April 1, 2013, most properties owned by the FDIC will be sold with a reservation of mineral rights retained by FDIC unless the buyer specifically negotiates a higher price for the mineral rights to be included. The exceptions to this change in the method of sale of properties by the FDIC are condominium units and properties valued at $50,000 or less. All other properties will be subject to the exception for mineral rights. If the buyer elects to purchase the mineral rights, mineral contractors will provide a valuation of those rights and the buyer will be responsible for all associated expenses in obtaining the valuation.
Stuart Sobel’s work since 2008 on behalf of the estate of the late interior designer James Wallace Tutt III was chronicled in an article in yesterday’s Miami Herald and another report in today’s Daily Business Review. Stuart prevailed before the Third District Court of Appeal in securing a judgment in favor of the estate in a case involving the famed designer’s $2.9 million sale of the one-acre Bahamian island Caribe Cay. Tutt was the interior designer for Gianni Versace’s South Beach mansion as well as a mansion owned by Cher, and he also became famous as the owner of the boutique Rock House hotel on Harbour Island near Eleuthera in the Bahamas where past guests have included Elle Macpherson, Naomi Campbell, Diane von Furstenberg, Barry Diller and Uma Thurman.
Sometimes a party leasing a parcel of property wants to have the right to purchase the parcel in the future, thereby protecting its leasehold investment in the property. The tenant typically asks for a right of first refusal to purchase the property if and when the landlord receives an offer. That is the key difference between a right of first refusal versus a right of first offer. The right of first refusal is triggered when a third party initiates an offer to the owner/landlord.
A letter of intent (“LOI”) is a preliminary agreement that is used to outline a general understanding of the basic business terms of an anticipated real estate transaction. LOIs are generally used to establish the general framework of the business deal and are intended to serve as an outline for the lawyers to use in drafting a binding, formal purchase and sale agreement or lease agreement.
In many purchase transactions, a key element of the negotiation is the condition of the property and what representations, if any, a seller is willing to make as to the condition of the property being sold. Often the seller insists that the sale is in AS-IS condition and shifts all the responsibility for determining the true condition of the property to the purchaser by granting a time frame within which the purchaser has the right to have the property inspected and, if not satisfied, cancel the deal and walk away.
We were recently involved in a transaction where the buyer’s counsel insisted on numerous representations and warranties from the seller in a transaction involving the sale of a free-standing, single-tenant retail location where the tenant was primarily responsible for the operation and maintenance of the property. The seller resisted many of these requests given that the tenant was primarily responsible for many of the issues being addressed and the seller was in no position to make representations on issues for which it had no direct knowledge. It is not uncommon for the buyer and their counsel to ask the seller to make representations on many issues, as even if a transaction is an AS-IS sale or a variation thereof, the seller still is often required to make representations as to certain issues. Subsequently, this is where the negotiations begin.