M & A Nuggets: Real Estate Issues

10/4/16

If 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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ABOUT GLENN D. SOLOMON

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 businesses, structuring ownership agreements, and advising companies in financial distress

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With 120 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eight offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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