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It all depends what your goals are, what is the status of your negotiations, and what is the seller attempting to achieve. A letter of intent is intended as a non-binding summary of the directions of the parties. Truly, some people only comfortable if the negotiations are proceeding down a path to which they agree. To this extent, a letter of intent is helpful. It tends to enunciate clearly the position of the parties and where agreement is close at hand. But, because it is not binding, it does have very limited use. For instance, it might be used to express what the parties have agreed to verbally so that their positions might be presented to their attorneys for drafting of the final documents. But, at the same time, some would suggest that, rather than achieving any false security in a letter of intent, that the parties ought to immediately draft the buy/sell agreement and have the opposing party sign it so that there is, in fact, a binding agreement, even if it has significant contingencies. This approach would be especially appropriate if it is suspected that the seller is using the letter of intent as a delaying tactic, to get additional time before signing a buy/sell agreement so as to pursue offers from other interested parties. In short, a letter of intent can be a useful instrument, but it also can work to your disadvantage. Is there any reason that you cannot put together a buy/sell agreement at this point and submit it to the seller?
Buyer has the option of forcing a seller to close on the property. To pursue that right, however, the buyer would have to file suit. The legal theory is called 'specific performance'. Because real estate is considered to be one of a kind (i.e., there is only one building like you are looking at in that exact location), the law does provide that the buyer can force the seller to sell and close on the transaction.
There is not just one appropriate answer to your question, and the answer will not only depend upon your objectives, but will consider other factors, including: your income tax situation, your estate planning situation, your age, the type of businesses location in the property, etc. There are many options available including the following: a radio corporation, a C corporation, individual names, partnerships, limited partnerships, limited liability companies, etc.
The short answer to this question is 'yes'. I suspect the real question you have is whether you should proceed with the purchase once you have been notified of environmental issues. That I cannot answer without a review of the problems as well as your objectives. We have worked with many parties who have concluded purchase of contaminated property. Following the appropriate procedures may mean that the buyer does not have to be concerned about the costs of remediating the environmental problems. (The property will still be contaminated.) Each property and each situation presents a unique situation, which does not suggest a uniform answer. Besides your own concerns over the environmental issues, if the property is contaminated, it may present difficulties for your lender and therefore impair your ability to obtain financing to accomplish the purchase. In short, you should be concerned, and you need to address the issues. However, it does not have to be a defining factor in whether you will or will not purchase the property.
I would not recommend purchasing the property prior to resolution of the issue, unless you are happy owning the building you indicate and not using it. Your situation really has two distinct areas of concern. The first is acquiring an interest in the property. The second is working with municipal officials to determine whether you can use the property as intended. You likely do not wish to pursue the second and invest significant funds if the first is not going to work out. In pursuing the first objective, there are a number of alternatives. The first alternative would be to prepare a purchase agreement with an appropriate contingency allowing you to walk away if the local official do not give approval to use of the building for your intended purposes. A second way of accomplishing this might be to obtain an option on the property. During the option period, you could then pursue approval of you intended use. The second issue is usually resolved either through petitioning the municipality for a change in zoning (to a zoning designation which would permit your intended use), or a zoning variance. The solution might also have a component of politics involved. The ultimate recommended course of action will depend upon the municipality involved, the historical action of the appeal boards, the deviation of intended use provided for in the zoning ordinances, historical uses, as well as other factors. When there is an option, your realtor has suggested using one. A real estate option is a written agreement between a potential purchaser and the owner of the property. It gives the potential purchaser the right, but not the obligation, to purchase the piece of property from the seller. There may be commissions involved or it may be entirely unilateral. There often is an option price that goes to the seller because the seller is giving up his rights to market the property to other parties during the option period. Options are frequently utilized when buyers are attempting to a
Maybe. If the tenants have written leases, you must honor those leases. Obviously, if the tenants are violating the leases, you may be able to evict them if they do not correct their violations in accordance with the terms of the lease. Assuming that the leases are on a month-to-month basis, you would be able to evict them after you give them at least one month's written notice.
I would suggest that you obtain legal counsel immediately to discuss your situation. Your purchase agreement may detail who is responsible for any losses during the purchase agreement period. If that risk of loss is on you, it is unlikely that you can avoid purchasing the property because of this casualty loss. If the agreement is silent, Michigan statutes provide that the risk of loss is on the seller until closing. However, before making your mind up on the direction you wish to proceed, you may wish to consider all of the alternatives. What happens if the seller repairs all damages prior to the closing date? It is possible that, if you were anticipating remodeling the building, the seller would work with you to turn over insurance proceeds. Depending on the condition of the building and your intentions, this may be an opportunity as opposed to a setback. Early intervention on your part may work to your advantage.
Unfortunately, the term 'triple-net lease' is not as universally defined as one would like. However, the most generally accepted use of the term is that a tenant pays for all expenses associated with a property, except for debt servicing (principal amortization and interest). Thus the tenant would pay taxes, operational expenses, repairs, utilities, etc. Occasionally, parties will see the term 'triple-net lease' utilized, but the landlord remains responsible for some structural or major components (i.e., rough, building, heating equipment, or similar item
I can give a reasonable answer in this form to the first question but not the second. The details are far too complicated for me to explain all of them to you in the space provided here. However, a 1031 exchange refers to a section of the Internal Revenue Code (Section 1031) in which the Internal Revenue Service gives tax deferral status to certain types of exchanges. In essence, if a party, instead of selling a property and buying a new property, decides to exchange those properties, the IRS will not tax the transaction, but will allow tax bases which you had in the first property to be transferred to the second party. You will not avoid tax, but will defer the tax on the transaction until you sell the replacement property. Cash received in addition to the exchange, will be taxed at the time of the exchange. Originally, you would have had to locate the party and arrange the exchange. However, this area has become so sophisticated that there are now parties who facilitate these types of exchanges - - allowing you to complete the sale of your property while attempting to find a replacement property. In utilizing one of these facilitating parties, you have a certain number of months to identify and close on the replacement property. This allows tremendous flexibility. However, one rule remains paramount: 'The exchange properties' must be similar (i.e., a commercial office building for a commercial office building, an industrial warehouse for an industrial warehouse, etc.).