4 Rights Sellers Must Know During a CRE Transaction
2 min read.
Representing a seller in a commercial real estate (CRE) transaction means you are responsible for informing your CRE clients about their rights in successfully navigating the sale.
Below are four fundamental rights that sellers must know that will grant them the authority to shape and safeguard their interests in CRE transactions.
1. The Right to Set the Terms of the Sale Agreement
The first and foundational right for sellers is the authority to establish the terms of the sale agreement. This grants sellers the autonomy to define terms and conditions that align with their best interests. From determining the purchase price to setting the closing date and outlining various contingencies, sellers wield the power to structure the agreement. Nevertheless, sellers must operate within the bounds of applicable regulations and laws governing the transaction.
2. The Right to Enforce Terms of the Sale
Beyond setting the terms, sellers possess the right to enforce them. This legal entitlement empowers sellers to seek remedies in court if the other party fails to uphold their obligations. The ability to ensure the terms are adhered to underscores the seller's commitment to a fair and just transaction.
3. The Right to Have Total Purchase Price
In Ontario, sellers enjoy the critical right to receive the total purchase price for the commercial building. This legal entitlement enables sellers to demand the complete agreed-upon amount. If a buyer fails to provide the total sum, sellers can take legal action and enforce their right to total compensation.
4. The Right to Ask for Financing Proof
A particularly advantageous right for sellers in Ontario is the ability to request proof of financing from potential buyers. This legal entitlement empowers property owners to solicit documentation verifying the financial resources of prospective buyers. This step is crucial in assessing whether the buyer has the necessary funds to fulfill their financial commitments in the transaction.
The significance of these four rights is magnified in CRE transactions, where substantial financial resources are essential. By notifying your clients of these buyer rights and exercising them, sellers gain valuable insights into the financial capability of potential buyers, reducing the risk of default on payments. It is a strategic move to ensure a secure and successful transaction for sellers in the dynamic realm of commercial building sales.
References
Chen, J. (2023, August 2). Sales and purchase agreement (SPA): What it is, with examples. Investopedia. https://www.investopedia.com/terms/s/salesandpurchase.asp
Homes, K. H. (2022, February 16). What is proof of funds in real estate? - hov blog. The K. Hovnanian® Homes Blog. https://www.khov.com/blog/what-is-proof-of-funds-real-estate/
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