The Benefits of a Commercial Purchase Agreement
- Posted on March 6, 2023
The benefits of a commercial purchase agreement are endless. You gain security and transparency and establish agreement terms with a single document. Here you'll learn what it is, what it contains, and the benefits of having one.
What is a commercial purchase agreement?
A commercial purchase agreement is a legal contract that allows the seller to agree with the buyer to transfer commercial property ownership in exchange for trade. Since the contract is legally binding, the buyer should understand the terms and conditions fully.
To validate the contract, the buyer deposits earnest money (consideration), which ranges between 2% and 5% of the commercial property purchase price. The amount is refundable when the property seems to have issues during inspection or other due diligence activities.
Commercial purchase agreements involve financial and ownership rights for both parties, making them more complicated than residential purchases. Writing this document entirely depends on the terms that both parties have negotiated.
Parts of a Commercial Purchase Agreement
Commercial purchase agreements vary according to the type and state of the property. However, almost everyone will include the key parts that cover the purchasing terms.
Ensure these key parts are included in the agreement to avoid problems or confusion during the commercial property purchase:
- Description and address of the commercial property to be purchased
- The buyer's and property's seller's name, contact, and address
- Closing dates and costs
- The purchase price agreed upon by both parties
- Type of sale
- Pre-closing matters
- Conditions precedent to the obligations of the buyer
- Due diligence and inspection period
- Contingencies like appraisals, pending inspections, or actions that could lead to sale cancellation or delay
- Condemnation or casualty damage
- Title and survey
- Default, insurance, and termination
- Relevant disclosures like asbestos and lead paint
- Warranties, representation, and covenants
- Excluded or included items like furniture pieces and equipment
- Real estate commission
- Dispute resolutions
- Signatures by all parties included in the agreement
How it Benefits You
- Prevents potential misunderstanding
A written commercial purchase agreement involves two or more parties (mostly the seller and buyer) engaging in a business transaction. It allows both parties to read and clearly understand the transaction's terms and conditions. This includes each party's liabilities and expectations and the final terms of negotiation.
- Proof of details
A commercial purchase agreement serves as an ultimate agreement understanding between the two parties to the commercial purchase contract. It is a legal evidence of proof of details that showcase the agreement between the parties involved. It also proves payment liability that either party should comply with the people involved. That's why all these details must be included in the contract to serve as legal evidence.
- Confidentiality is guaranteed
Commercial transactions in a written agreement need to have a confidential clause. Non-disclosure and confidentiality provisions are included in the contract that parties agree on to protect information related to the business. Commercial purchase agreement legally binds the seller, the buyer, and other parties involved to hold the information exchanged during the commercial property purchase in secrecy. Any party that violates the confidentiality clause is held liable under the contract.
- Serves as Security
Another benefit of signing a commercial transaction contract is that the security of the transaction between the involved parties is assured. The seller and the buyer are responsible for their payment, responsibilities, duties, and general relationship. So, they must comply with the relevant laws and contract terms and conditions.
- It’s a Business Transaction Record
A commercial purchase agreement keeps record of all the purchase details, including the price of the commercial property, the amount paid, and any other terms related to the purchase. This makes it a legally binding contract, which is a permanent transaction record that allows the buyer and seller to reference it during negotiations in case of any disputes over the terms of the purchase.
Work with the Experts at Rochford Law
At Rochford Law, we understand that having a meticulously crafted commercial purchase agreement is the easiest way to guarantee that you get the most value for your buying deal. If you are looking for a smoother and quicker commercial purchase, it's time to contact the experts at Rochford Law. We will help craft an agreement that gives you all the advantages of purchasing a commercial property while maximizing its worth.
Contact us today for a free quote.