Which part of the property legal framework, or prospective development, scares you the most?
My “trick or treat” topic would be exclusivity agreements (where sellers give buyers a window of time to do their due diligence, during which time the seller won’t negotiate with anyone else).
Commercially, exclusivity agreements sound like a no-brainer and should be easy to document. The reality is that this is a trick, because sellers and buyers both want, and think they’re getting, different things. Sellers think that the buyer will definitely buy unless they discover something so fundamental that the property is unsellable (which they’re confident there won’t be because they’re sure their lawyers did a great job when they bought the property, right?). Buyers think they have a definite right to buy the property if they want to, but don’t want to be under any obligation to do so (because whilst the property looks good they haven’t finally made up their minds that they want to buy it or that they’re really happy with the eye-watering price that they agreed to secure the deal; it’d need to be perfect for that kind of money, wouldn’t it?). So in reality there is no meeting of minds.
Explaining to the parties that, instead of killing all the goodwill and wasting vast amounts of time (and money), the best thing to do is to simply set a tight timetable and get on with it. The cherry on the top is getting to an actual exchange in less time than it would have taken to agree the exclusivity!
This article was originally published on the Current Awareness service on LexisLibrary on [30/10/15]