The Problem

Our client wanted to purchase a mixed-use commercial property comprising a small shopping centre with retail and office tenants and a gas bar/convenience store tenant with franchise operations.  

Our Approach

We negotiated an Agreement of Purchase and Sale with some extensive due diligence conditions for our client to be satisfied at its sole discretion with an environmental audit and soil testing, particularly in the vicinity of the gas bar (to be paid for by the Vendor); building and systems inspections by a qualified building inspector; title and off-title searching including inspections by the Fire Department, Technical Safety Standards, and the Municipality’s Planning, Building and Zoning departments; review of all of the tenants’ leases, a rent roll and Estoppel Certificates signed by all tenants; review of the franchise agreements and confirmation that they were in good standing from the franchisors, and review of the Vendor’s expenses and income statements for the shopping centre’s operations. On reviewing these reports and documents, we were able to negotiate a significant reduction in the purchase price by having the Purchaser accept some of the building and lease deficiencies; requiring the Vendor to complete certain repair work prior to closing, and further representations and warranties from the Vendor to survive closing. We also helped our client negotiate its financing commitment with its chosen Lender on terms acceptable to our client.

The Result

We successfully closed the purchase transaction with the Vendor with a reduced purchase price, repair work completed and representations and warranties to survive closing if later deficiencies in the buildings or property became apparent. Extensive and detailed closing documents were negotiated, prepared, and executed to sufficiently protect our client’s interests. We also prepared a new standard form of Lease for our client to use with new tenants. Our client is now operating a highly profitable shopping centre with a low vacancy rate and very few tenant defaults or problems requiring legal intervention.