As with any financial transaction, unnecessary holdups with information can delay or kill the deal. The investor needs all due-diligence information within the prescribed schedule, which is normally documented in the purchase agreement. This will ensure the property doesn’t remain off the market for an extended period of time in the event the investor chooses to forego the purchase.
Provide the buyer with a detailed checklist of documents and have him sign a receipt certifying and confirming acceptance. The due-diligence period will normally start at this point in the transaction. The checklist should include a short description of each document and the source of the information (i.e., public records, tax assessor, court, etc.).
Also include contact information, e-mail addresses and phone numbers as necessary. In the event a document is not included, provide an explanation for the omission. This disclosure will prevent unnecessary delays during the due-diligence review.
Remember, any inaccuracies in the information will cast doubt on the transaction and may lead to uncertainty on behalf of the buyer, which could lead to a lower sales price or cancellation of the transaction. In fact, a cautious and knowledgeable investor will be looking for document omissions or errors. If he finds them, he may find more time evaluating and analyzing the deal.
It’s always a prudent for the seller to disclose all aspects of the property. Not doing so could lead to post-closing issues, which could result in legal action and monetary damage.
I recommend the seller and buyer consult with legal and financial advisors to review all documentation and confirm that legal and financial standards have been satisfied. By following the recommendations above, you’ll provide a smoother transaction for you, the buyer and the lender.
Stephen I. Grossman is a senior vice president with NAI Capital Self Storage Investment Group in Newport Beach, Calif. The company specializes in self-storage brokerage in California and Hawaii. Mr. Grossman has been responsible for the sale of more than 800,000 buildable square feet of entitled self-storage land and the sale or escrow of more than 3 million square feet of existing self-storage facilities. For more information, call 949.468.2394; e-mail firstname.lastname@example.org .