Real Estate Purchase and Sale Contracts in 2021: New Closing and Transaction Risks During the Downturn

Timing Concerns, Closing Conditions Defenses, Legal Doctrines, Reliance on Third-Party Providers

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


Conducted on Tuesday, December 15, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will provide real estate counsel with advice on navigating purchase and sale transactions following the economic contraction of 2020 and the public health restrictions and uncertainties related to COVID-19. Real estate stakeholders are reviewing agreements to determine whether there are conditions to closing or defenses based in law that might justify a decision not to proceed with a transaction. They are also addressing new considerations and risks given what we have learned from the early days of the pandemic. Lenders, sellers, and buyers, never more conscious of what can go wrong in a deal, are grappling with the uncertainties of what the new spike in COVID-19 may bring as they try to ensure that their transactions proceed to closing or, alternatively, to preserve their options.

Description

The current economic climate and risks of a second wave of shut downs causing limited access to government offices and other logistical challenges that create issues for real estate closings that counsel must address moving into 2021 and beyond.

As parties to real estate transactions assess both new—and continued—risks presented by the COVID-19 crisis and the subsequent economic downturn, they should consider the potential impact of issues related to the timing of closings. Whether to close on a “gap” or require a deed-recordation closing has become a more significant issue. Further, parties should consider the implications of "time of the essence" clauses as they structure their transactions, negotiate with counterparties and prepare for closings. Typical closing conditions, including tenant estoppels and dating down representations now more likely can throw a wrench into closings. Moreover, the economic fallout from the COVID 19 crisis has spurred some buyers to demand additional conditions to closing based on material adverse changes, which some sellers see as problematic.

Counsel must determine whether a non-performing party is in default for failing to close either due to strict enforcement of timing or an unwillingness to close. A non-performing party may assert defenses of impossibility of performance, frustration of purpose, violation of good faith and fair dealing, or force majeure in addition to claiming a failure of closing conditions.

Additionally, sellers, buyers, and lenders typically rely on third-party providers in the course of a sale/financing transaction. Not all third-party providers whose services are necessary to perform obligations under a transaction will be classified as essential workers. Counsel must check applicable and evolving ordinances and contact those providers directly to determine whether services are available in-person or remotely to proceed. Counsel must also assess how deadlines, including, but not limited to, filing deadlines, IRS Section 1031 deadlines, and due diligence deadlines for inspections, title, and survey, may be impacted.

Our expert panel will provide practical tips for drafting, negotiating, and defending positions for sellers, buyers and lenders in an environment mired with uncertainty from a myriad of causes, which continue to surprise as time goes on.

Listen as our expert panel provides practical tips and procedures for timely and successful closings in an environment limited by both the COVID-19 crisis and the economic recession that followed.

READ MORE

Outline

  1. How COVID 19 has impacted real estate closings
  2. Time of the essence
  3. Closing conditions then and now
  4. Potential defenses for breaching parties
    1. Impossibility of performance
    2. Frustration of purpose
    3. Good faith and fair dealing
    4. Force majeure
  5. Reliance on third-party providers
  6. Further PSA evolution from COVID-19 and the downturn

Benefits

The panel will review these and other key issues:

  • What closing and other risks should counsel consider due to the economic downturn?
  • Are there timing issues opposing parties in a sales transaction if there is a delay in closing a sales transaction?
  • What possible defenses exist to a breaching party of a real estate sales transaction and what is necessary to prove such a defense?
  • How does reliance on third-party providers impact real estate closings after 2020?
  • What drafting considerations should be addressed to anticipate potential uncertainties?
  • What are the best practices and procedures for conducting a real estate closing in 2021 and beyond?

Faculty

Akerman, Elizabeth
Elizabeth M. Akerman

Attorney
Stroock & Stroock & Lavan

Ms. Akerman provides clients with comprehensive counsel on complex commercial real estate transactions. She regularly...  |  Read More

Arkow, Loryn
Loryn D. Arkow

Partner
Stroock & Stroock & Lavan

Ms. Arkow has extensive experience handling acquisition, disposition and development transactions; joint ventures,...  |  Read More

Sohn, Joshua
Joshua Sohn

Partner
Stroock & Stroock & Lavan

Mr. Sohn’s practice spans a wide range of commercial and regulatory matters, with particular focus in complex...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

$347

Download

$347