Contract & Completion
’s Practitioner reviews
the crucial final stages of an acquisition. After all the checking and the negotiation it’s time for a glass of champagne!
T
he purchase process is nearly complete. The price and Heads of Terms agreed, Due Diligence completed, final price negotiations sorted out, a draft contract prepared and
a completion date set. There are almost too many catch
phrases that warn of the dangers in this last, critical phrase. “Winning horses fall at the last fence, favourites fail in the home straight” and best known of all “It is not over until the fat lady sings”. Experienced acquisitors often insist that
their own form of Contract is used, despite the tradition that the vendor’s solicitors prepare the draft contract. Every industry has its own quirks so that the solicitors’ book and internet set of standard precedents cannot always be tweaked to fit the sale/purchase of an agency.
PAyment First – and most important, the funds necessary to complete must be in place in good time, any bank loan fully agreed and available for draw down. If payments, other than cash, on
completion have been agreed the documents must be in final form initialled by all parties and ready for signature on completion day.
schedules Whenever possible, break down the sale/ purchase into separate elements that can be included in the contract in the form of schedules, to avoid cluttering the vital document with detail. This tactic allows specialist solicitors, or departments of the same firms, to produce Schedules to the Contract of Sale that can again be agreed in advance pending completion.
Agreement of third PArties While the principals to any transaction will accept the need for urgency to get everything ready in time, third parties are not driven by the same imperatives. Matters that must be settled and ready
for signature on completion, or signed in advance and held in escrow, will include: Sale of freehold property Assignment of Leases with head landlords’ approval Assignment of Leases, rental or HP agreements for vehicles, office equipment, IT contracts and maintenance agreements Purchasers need to arrange:
• Extending PI Insurance • Employers and Public Liability • Property, fixtures and fittings
• Insurance cover for all categories of commercial insurance, including
PROPERTYdrum JUNE 2010 39
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