Representations and Warranties in Commercial Real Estate Purchase and Sale Agreements

by Practical Law Real Estate

This Note provides essential guidance on representations and warranties in commercial real estate purchase and sale agreements. Representations and warranties serve as critical risk allocation devices, setting out the facts relied upon by both parties and enabling claims if discrepancies arise. This Note delves into the strategic negotiation and drafting of key representations and warranties related to environmental issues, leases, management and service contracts, and liens. It highlights the importance of these clauses for both purchasers and sellers, with a focus on limiting and allocating risk based on negotiating leverage and transaction specifics. Additionally, it covers the use of knowledge qualifiers, materiality requirements, and survival periods to balance the interests of both parties. This Note is an invaluable resource for legal professionals seeking to navigate the complexities of commercial real estate transactions, providing guidance so that representations and warranties can be effectively tailored to protect their clients' interests.