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How an Access Agreement Can Speed Up Your Commercial Real Estate Transaction

By Elizabeth Whitman | September 6, 2018

Buyers and sellers want their commercial real estate transactions to move forward quickly. A buyer may ask to start inspecting the real estate and “kick the tires” while the parties negotiate a real estate purchase contract. The seller may have concerns about allowing this with no contract in place. To address these concerns, the buyer and seller may sign an access agreement.

Standard Access Agreement Provisions

An access agreement has some of the same provisions that would be in a real estate purchase contract. However, an access agreement limits its scope to the terms relating to the buyer’s inspection of the real estate. Typical terms of an access agreement include:

Scope of the Inspection. Some access agreements will permit the buyer to conduct any inspection allowed under a real estate purchase contract. Other times, an access agreement may limit buyer's inspection to non-invasive activities, such as reviewing financial records or walking through the property.

Notice. Buyer must provide notice to seller before to going to the property to inspect it.

Inspection Limitations. Usually, the buyer will only be allowed to enter the property during regular business hours.  The buyer may not be allowed to enter space rented to tenants. Or the buyer may be required to take seller's representative along when buyer does so. Likewise, the seller may not want the buyer to contact governmental agencies about concerns with the property. Or, the seller may not allow buyer to conduct invasive testing.

Confidentiality. The seller should require the buyer to maintain confidentiality of any information seller provides during the inspection process.

Indemnification. The buyer will agree to indemnify the seller for damage caused due to the buyer’s inspection of the real estate.

Insurance. The seller will require the buyer and its contractors to have general liability insurance. Usually, the insurance must include seller as an “additional insured,” so that the buyer’s insurance will cover the seller if a third party is injured during the buyer’s inspection.

Term of the Access Agreement. The access agreement usually will end when the parties sign a contract. However, the parties should agree to when the access agreement will end if a contract is not signed.

Return of Information if no Contract is Signed. The access agreement should require the buyer to return all nonpublic information about the real estate to seller if the parties do not sign a contract.

Optional Access Agreement Provisions

Although the following terms are not typically in an access agreement, the parties may want to consider including them.

Tenant non-solicitation. If the buyer has other properties in the area and is given access to any tenants, the seller may want to prohibit the buyer from trying to induce tenants to move to buyer’s other properties.

Employee non-solicitation. The real estate purchase contract may allow buyer to hire on-site employees when buyer purchases the real estate. However, if the buyer does not buy the real estate, the seller may want to prevent the buyer from luring its employees to another property owned by buyer.

Intellectual property protection. During inspection, the buyer may see seller’s policies and procedures, lease forms, and other intellectual property. The seller may want to prohibit the buyer from appropriating these items for its use at another property.

An access agreement can help a real estate transaction to move forward quickly while the parties are negotiating a contract. However, the access agreement should contain provisions to protect the seller from harm if the parties do not later sign a contract.

Elizabeth Whitman is an attorney and broker who has represented clients in more than $1.3 billion in real estate transactions.Elizabeth's law firm, Whitman Legal Solutions, LLC, is located in suburban Washington, DC and represents real estate owners and securities sponsors throughout the nation.
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