Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties

The Purchase and Sale Agreement

It is beyond the scope of this book to analyze a Purchase and Sale Agreement (PSA) on a clause-by-clause basis; however, the following material discusses crucial contract terms with a focus on practical business suggestions. Also, ideally, the buyer or his attorney should compose, concurrent with drafting the PSA, a succinct summary of critical dates and a separate list of all documents that must be produced during escrow. By doing this prior to execution of the PSA, the buyer can clearly understand his obligations and therefore, hopefully, not omit an important date or document.

Identify What You Are Purchasing

In a real estate transaction, usually the main items being bought are real estate, land, and the improvements that are situated on the land. However, care must be taken, because if you are purchasing a hotel, for example, there might be extensive personal property that should be transferred with the acquisition. Hotels typically will contain extensive fixtures, furniture, and equipment (FF&E) integral to the hotel's operations that are usually transferred upon sale. Likewise, the hotel's liquor license might be an important personal property right that might be involved in the sale. If you are acquiring a medical building with an existing surgical center lease that will be taken over, it might become crucial to make sure that the surgical center license is preserved so that the accreditation process does not have to begin from ground zero, ...