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LPC Law Notes Private Acquisitions Notes

Property And Environmental Aspects Notes

Updated Property And Environmental Aspects Notes

Private Acquisitions Notes

Private Acquisitions

Approximately 339 pages

A collection of the best Mergers and Acquisitions* notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short, these are what we believe to be the strongest set of Mergers and Acquisitions notes available in the UK this year. This collection is f...

The following is a more accessible 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:

    • Landlord’s consent to assign (business sale)

    • 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:

    • Seller has good title to all properties

    • All properties have benefit of all necessary rights required for use/enjoyment

    • Properties not subject to onerous conditions/third party rights

    • Properties can be used for purposes intended by Buyer

Investigating Title & Protection

Business Sale Share Sale

All properties elected/included in transaction will transfer to Buyer

Normal investigation of Title will occur via:

· Investigations/Searches/Enquiries

· Certificates of Title; or

· Property Warranties

The properties owned by the Target do not change hands, they stay with the Target so different conveyancing process to normal.

Buyer can obtain protection via three methods:1. Investigation of Title

· Title investigated in normal way by Buyer’s Solicitors

· Will be done if property important/big part of transaction/Target’s major assets

· Expensive/time consuming however

2. Certificate of Title

· Useful if Investigation of Title already been done

· Provided by Seller’s Solicitors

· Remedy = negligent misstatement against Solicitors

· Buyer can request warranty guaranteeing truth/accuracy

· Negotiation takes time but quicker than Full Investigation

Seller’s solicitor will seek to limit liability via:

· Disclaimer that won’t accept responsibility re information

· Certificate expressed to be for benefit of that particular transaction only

· Limit on financial liability

3. Property Warranties

· Lowest level of protection

· Used for unimportant properties in general scheme

· However only as good as person giving them

· If Seller has limited resources – unattractive warrantor

· Recovery under warranties subject to uncertainties of litigation

On the whole – relevant factors will depend on each parties bargaining powers and their resources. If one is stronger than the other then they can force the other to do an investigation or give extensive warranties.

Environmental Aspects

Having bought the property, the Buyer can be liable for costs of cleaning up contaminated land even if they were not responsible for the original contamination. Can be forced to clean up as a result of contamination notices served by Local Authorities.

· Whether contamination is an issue should be considered in every transaction

· Will allow Buyer to

Liability for Clean Up

Local Authority will notify Interested Person of Contamination:

· Class A – original polluter

· Class B – occupier, if original polluter cannot be found

· If more than one person responsible for pollution, can agree amongst themselves who is responsible for clean-up and apportion liability


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