Commercial: The seller of a commercial property has rejected my client’s offer to purchase that property. We used TAR form 1801, Commercial Contract—Improved Property. The seller’s agent said the seller rejected the offer because he was selling the property “as is” and was not going to do any repairs. Therefore, the buyer’s request for a feasibility period and his right to inspect the property were not necessary for the contract. The listing agent suggests that we submit another offer without the feasibility paragraph checked on the form. Do we have to choose between the property condition “as is” paragraph and the feasibility paragraph in the contract?

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  • Commercial: The seller of a commercial property has rejected my client’s offer to purchase that property. We used TAR form 1801, Commercial Contract—Improved Property. The seller’s agent said the seller rejected the offer because he was selling the property “as is” and was not going to do any repairs. Therefore, the buyer’s request for a feasibility period and his right to inspect the property were not necessary for the contract. The listing agent suggests that we submit another offer without the feasibility paragraph checked on the form. Do we have to choose between the property condition “as is” paragraph and the feasibility paragraph in the contract?

Unless a buyer is requesting in his offer that the seller agrees to do certain repairs, all buyers purchase property in its present condition (or “as is”) at the time of contract execution. Paragraph 7A of the TAR contract allows for the buyer to purchase the property “as is” or to require certain seller repairs as part of the contract provisions. Regardless which choice is made in paragraph 7A, there is nothing inconsistent with either of those choices and a buyer’s right to inspect the property and possibly terminate the contract under the terms of paragraph 7B, the feasibility paragraph. While a seller could refuse to permit a buyer to have inspections or a right to terminate under a feasibility period, it is generally not a good idea to try to prevent a buyer from having a right to freely inspect the property. Such a restriction might increase the seller’s risk of a subsequent claim of withholding information about the condition of the property. Furthermore, most buyers are going to be reluctant to buy a property without a right to inspect the property and often would not buy commercial property without a feasibility study and a companion right to terminate if not satisfied about the viability of the proposed project. You might discuss these points with the seller’s agent and see if a thoughtful reconsideration of these matters by the seller might create an opening for you to resubmit your client’s offer. It should be stressed that the granting of the buyer’s feasibility study period and his inspection rights do not obligate the seller to do any repairs.

Source: TAR

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