Commercial: The seller of a commercial property has rejected my client's offer to purchase that property. We used TAR form 1801, Commercial Contract—Improved Property. The seller's agent said the seller rejected the offer because he was selling the property "as is" and was not going to do any repairs. Therefore, the buyer's request for a feasibility period and his right to inspect the property were not necessary for the contract. The listing agent suggests that we submit another offer without the feasibility paragraph checked on the form. Do we have to choose between the property condition "as is" paragraph and the feasibility paragraph in the contract?Unless a buyer is requesting in his offer that the seller agrees to do certain repairs, all buyers purchase property in its present condition (or "as is") at the time of contract execution. Paragraph 7A of the TAR contract allows for the buyer to purchase the property "as is" or to require certain seller repairs as part of the contract provisions. Regardless which choice is made in paragraph 7A, there is nothing inconsistent with either of those choices and a buyer's right to inspect the property and possibly terminate the contract under the terms of paragraph 7B, the feasibility paragraph. While a seller could refuse to permit a buyer to have inspections or a right to terminate under a feasibility period, it is generally not a good idea to try to prevent a buyer from having a right to freely inspect the property. Such a restriction might increase the seller's risk of a subsequent claim of withholding information about the condition of the property. Furthermore, most buyers are going to be reluctant to buy a property without a right to inspect the property and often would not buy commercial property without a feasibility study and a companion right to terminate if not satisfied about the viability of the proposed project. You might discuss these points with the seller's agent and see if a thoughtful reconsideration of these matters by the seller might create an opening for you to resubmit your client's offer. It should be stressed that the granting of the buyer's feasibility study period and his inspection rights do not obligate the seller to do any repairs.
thank you- very helpful
Just had a situation similar to this where my seller refused the feasibility study that the lender requested. Buyer changed purchase to cash and property sold. The last sentence notes the seller would not be obligated for repairs. If an oil spill was discovered under the feasibility study, would the inspector be required to report to EPA? Could it ultimately cost the seller to remove the contamination?
Even if you buy the property “as is” or with no feasibility study – do you think the seller could stop the buyer from conducting inspections? I know that in residential that would not be so. A seller cannot stop a buyer from doing their due diligence; if the buyer gives a copy of the inspection report to the sellers agent – in residential – the seller must disclose that report for the next 4 years. All that is lost is the right to terminate for any or no reason. Once the seller is faced with the inspection report the… Read more »
It is a big purchase and major problems comes aware and the buyer still has the right terminate
Always have inspections whether selling “as is” the buyer has to know not for opting out of it .