Thoughtfulness and precision are key when preparing commercial real estate agreements. The more effort that is front loaded into the drafting of an agreement, the more you mitigate the risks of litigating a preventable issue that could cost your client hundreds of thousands of dollars—or more. Drafting commercial real estate agreements is a comprehensive process. However, when drafting these complex agreements, it is important to pay attention to certain material provisions such as: the quality of title to be conveyed at closing; default provisions; and dispute resolution mechanisms, among several others.

Commercial real estate agreements generally set forth the quality of title that a seller is required to convey at closing, which is typically “good, insurable and marketable.” Most agreements contain language allowing buyers to examine the title for a set period of time and specifying whether the seller must cure any defects identified by the buyer. Precise language is important to a seller because failure to convey the quality of title required under the agreement or to cure certain title defects may trigger a default. On the other hand, precise language with respect to title is important for buyers as they will base their diligence efforts on not only the quality of title that the parties negotiate, but also the various periods of time provided in the agreement, in the title provisions, for the “inspection period.”

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