Legal Blog

M & A Nuggets: Real Estate Issues

shutterstock_119647393If you purchase a business and intend to use the real estate that is owned by the seller or its owner, a host of issues arise that must be dealt with in the business negotiations.  This nugget will be the first of several to discuss these real estate issues, the first one being environmental concerns.  If the business you are purchasing is located in a business park or surrounded by manufacturers or distributors, you must address the environmental condition of the property.  Whether you will lease or purchase the real estate from the seller as part of the business purchase, a proper allocation of responsibility for environmental matters needs to be made.  In order to do that, you must first conduct due diligence on the environmental condition of the property.  That due diligence includes obtaining all environmental reports from the seller, determining the scope of the environmental inspection to conduct and having the inspection conducted.  If as a result of your investigation an environmental condition becomes apparent, the environmental condition should be remedied prior to the closing.  Any real estate contract must make clear that the seller is responsible for environmental conditions that exist on the closing date.  But determining whether an environmental condition exists is an inexact science.  Further, if a problem surfaces post-closing, determining whether the condition existed before closing or first arose after closing is also difficult.  One way to manage this conundrum is to verify that the seller has adequate environmental liability insurance in place and to obtain the same insurance to protect your business.


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Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress






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