This is an extract of our Property And Environmental Aspects document, which we sell as part of our Private Acquisitions Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.
The following is a more accessble plain text extract of the PDF sample above, taken from our Private Acquisitions Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Property and Environmental Aspects
Property Aspects Issues for Buyer Essential element is that Seller/Target has good and marketable title to the Properties so on both share sale and asset sale the Buyer will want to check:
* Value of property
* That title is vested in seller (business sale) or target (share sale)
* Any contingent liabilities
* Any contingent environmental liabilities
* Relevant planning permission obtained
* Can be used for actual and proposed use
* Any third party rights adversely affecting the Property
* Full information in respect of SDLT history
* Any charges or debentures burdening Property
* Any consent required for transaction to go ahead: o Landlord's consent to assign (business sale) o Consent under a change of control clause (share sale) Due Diligence Specifically going to be looking for existence of any: Original Tenant Liability
If Tenant was original tenant of an Old Lease, remains liable to landlord for tenant covenants in the lease infinitely:
* Liability would pass to Target on Share Sale
* Liability would pass to Target on Business Sale if leasehold interest included in sale.
* If leasehold interest not included - Buyer will take free from liability.
Authorised Guarantee Agreement
If Tenant was original tenant of a New Lease then tenant will automatically be released from any obligations under the lease if assigned BUT:
* If an AGA was given - Tenant will have guaranteed the assignee's obligations
* Target could thus remain liable to original Landlord
* Check data room for copies of any relevant AGA
Tenant's Right of First Refusal
Where property is mixed commercial/residential, residential tenants will have:
* Right of first refusal on transfer of freehold
* If non residential use is 50% or less
* Due to Landlord and Tenant Act 1987 This means on a Business Sale where Target's business is mixed residential/commercial and Seller wants to sell the multiple occupation property, residential tenants must be offered it first.
Security of Tenure
Under S30(1)(g) LTA 1954 a Landlord can oppose application for new tenancy if landlord intends to occupy the property itself. Needs to be considered:
* On business sale
* When acting for Buyer; and
* Seller is landlord of a lease coming to end within 5 years from completion of sale
* Always check in Lease whether this has been contracted out of (if yes - no problem) Not relevant on a share sale because:
* Landlord / Owner / Target / Tenant remains the same
Establishing Good and Marketable Title
* Buyer will want to ensure they acquire the property with good and marketable title so need to establish: o Seller has good title to all properties o All properties have benefit of all necessary rights required for use/enjoyment o Properties not subject to onerous conditions/third party rights o Properties can be used for purposes intended by Buyer Investigating Title & Protection Business Sale
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