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Mergers & Acquisitions: What are the Common Real Estate Issues?

Mergers & Acquisitions: What are the Common Real Estate Issues? Real estate issues can be quite critical in M&A transactions. You should become familiar with some of the basic issues that can come up. Be aware that concerns that come up in bread and butter real estate transaction may differ from those that come up in the mergers and acquisitions context. If an M&A deal does involves real estate, it will require additional thought and attention. If you are acquiring a business, many of the provisions found in traditional real estate agreements may not be in the M&A transactional documents. A buyer should not allow the real estate portion of the pact to be an ‘add-on’ tacked on to the end of the acquisition. For example, in a typical real estate transaction a seller will often require that the buyer do the real estate due diligence such as confirm state of title, the condition of the property, zoning, liens or lawsuits against the property, utility issues, etc. As a buyer you will want specific representations and indemnities regarding the real estate. If the purchase agreement neglects to drill deeper into those real estate issues, there could be post-closing headaches you did not anticipate. Sometimes in a M&A transaction, it is a good idea to have to have separate purchase agreements – one for the business and one for the real estate. This way each agreement can deal with specific issues relevant to each transaction. It is also a good way to deal with any adjustments that have to be made. Buyers also need to be aware of the nuances of asset deals versus stock deals in the real estate context. Other real estate considerations in M&A transactions can include the following: Title Insurance: A buyer may want to obtain new title insurance if the current title insurance is deemed to be inadequate. It is important to make sure that the transaction does not negatively affect the existing title insurance. Surveys: A buyer should also consider obtaining a survey to verify the exact boundaries  of the property and to see if there are any easements or other restrictions that come up. Sometimes properties can have convoluted perimeters. Deeds. What type of deed is memorializing the conveyance? In a real estate transaction a general warranty deed is the most preferred. Taxes. What are the tax and/or reassessment issues regarding the real estate? Is there a transfer tax, even one for a change of control arrangement? If an M&A transaction involves leases of real property there will be considerations regarding assignments and subleases, repairs and maintenance, landlord’s liens and representations and warranties. R. D. Adair, PLLC offers experienced business counsel and can assist you with your  business real estate issues in the M&A context. To learn more about the intersection of business real estate issues and M&A transactions  or how we can assist you in a related matter, contact us today to schedule a consultation

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