Owning a business invariably leads to asking questions about real estate and real estate law. Mergers, acquisitions, or launching new ventures are a few specific cases in which business owners should give special heed to following real estate laws and statutes. In this article, we seek to answer a few of the most frequently asked questions associated with these transfers. Buyers and sellers should take the measures below to avoid potential legal disputes and ensure the validity of the purchase.

Buyers

What due diligence should we perform?

Due diligence is the prep work performed  by the buyer before a purchase to ensure the asset poised for transferal meets compliance standards. The verification process will include reviewing, auditing, and investigating the seller’s history and that of the asset. Prior to signing a contract or making an investment, most buyers should: 

1. Verify the seller possesses the authentic property title
2. Understand the tax implications associated with the transfer to your business (these can vary by business formation)
3. Ensure that no legal obstructions to the property transpired during past ownership exist

1. Before completing the transaction, the seller is obligated to disclose certain information to the buyer. What disclosures should the buyer request that the seller provide?
2. Environmental Review: A document with details about compliance to environmental standards. Guarantee that all applicable environmental obligations are currently being met.
3. Easement Analysis:  Ensure that utility, conservation, or access rights have been previously granted to desired areas of the property and no restrictions are present. 
4. Water Rights Review:  In Utah especially, a separate transaction to guarantee water rights may be necessary. Verify whether this transaction would transpire concurrently or separately. 

Sellers

1. Sellers should provide information to buyers about:
2. Material defects
3. Environmental contamination 
4. Legal encumbrances associated with the property

Ensuring this occurs in the nascent stages of the transaction is vital. If the transfer contract is ill formed, and sellers are aware of their failure to meet any of these requirements, the seller is likely to be held liable legally responsible for not doing so. 

The steps for both buyers and sellers listed above will ensure not only compliance, but a relatively effortless transfer unencumbered by legal battles. For additional counsel about how to navigate your business real estate concerns, reach out to our team.

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