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Negotiating Survival Clauses and Holdback Provisions in Commercial Real Estate Sales Transactions

Avoiding Pitfalls of Merger Doctrine at Closing and Beyond

Recording of a 90-minute premium CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
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Conducted on Thursday, February 15, 2024

Recorded event now available

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This CLE course will discuss strategies for buyers and sellers negotiating survival clauses in commercial real estate transactions. Our experienced panel will offer critical insight into crucial terms for inclusion, duration, pitfalls to avoid, and how survival provisions interplay with holdbacks to minimize risks beyond closing.

Description

The merger doctrine holds that when parties convey real property by a deed, all prior covenants, agreements, proposals, stipulations, etc., between the parties regarding the conveyance are merged into the deed and superseded. The doctrine is based on the premise that the deed represents the final and entire contract between the parties and, when strictly applied, prevents any prior promise from surviving beyond escrow. The only obligations between the parties are those outlined in the deed.

Survival clauses allow buyers and sellers to sidestep this potentially troublesome practice by providing a means to address the balance of potential risks that can only resolve after the closing has occurred. Issues like indemnification for expensing relating to a respective party's time of ownership and "true-ups" of outstanding taxes or utility expenses typically remain unresolved by the closing date and, as such, must survive.

Likewise, buyers cannot accept the seller's representations and warranties without a means of recourse for breach. Increasingly, parties are relying upon holdback provisions to address potential liability for breach of these various survival clauses.

Listen as our panel of seasoned real estate practitioners discusses critical considerations when negotiating survival clauses and how holdback provisions can impact their effectiveness in commercial real estate sales agreements.

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Outline

  1. The merger doctrine
  2. Survival clauses
    1. What survives closing
    2. Duration
    3. Considerations for sellers
    4. Considerations for buyers
  3. Interplay with other provisions
  4. Holdbacks and other options for buyer remedies

Benefits

The panel will review these and other relevant issues:

  • How can parties effectively address survival language in transactions that terminate without closing?
  • How can counsel for buyers and sellers structure survival clauses for "as-is" sales?
  • What practical considerations should counsel for buyers and sellers make when negotiating the scope and duration of survival clauses?

Faculty

Kakstys, Clint
Clint Kakstys

Member
Sills Cummis & Gross

Mr. Kakstys’ practice focuses on the acquisition, disposition and financing of commercial properties. He...  |  Read More

Royce, Charles
Charles H. (Chuck) Royce

Partner
K&L Gates

Mr. Royce represents clients in the areas of commercial real estate transactions and leasing. His practice includes...  |  Read More

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