Purchase-Contract Considerations

Below is a partial list of deal points to negotiate into a purchase contract. Speaking from experience, the more comprehensive you make the agreement, the less likely you’ll have any surprises after the closing. First, the contract should state what the purchase price includes, such as:

• Land 
• Buildings 
• Personal property such as computers, software, security systems, tools, golf cart, etc.
• Retail inventory 
• Office supplies and marketing materials
• Tenant leases 
• Deposits for utilities such as electricity, phone, waste removal, etc.
• Tenant deposits 
• Tenant prepaid rent 
• Name of the self-storage business (corporate identity) 

The contract should state that the seller consents to a non-compete agreement. For example, the seller will not to be an owner, investor, employee or consultant in any self-storage business within in a 5-mile radius or 15-minute drive of the site.

The contract should set a date for due-diligence items to be delivered to the buyer. You may also want to request that any delivery days past the due date add to the due-diligence time period. The deliverables should include:

• Monthly profit-and-loss statements for the past year, certified by the owner as correct 
• Profit-and-loss statements for the past two years, certified by the owner as correct 
• Last three months of bank statements 
• Last three years of tax returns 
• Copy of the latest insurance binder 
• Copy of a past title-insurance binder 
• Property-tax bill for the most recent year 
• Rent roll with unit numbers, rent amounts, unit sizes and move-in dates, certified by the owner as correct 
• List of delinquent tenants with an aging report 
• List of pre-paid rents 
• List of any security deposits 
• List of personal property to be included in the sale 
• List and contact information for suppliers of key equipment, recurring maintenance, printing, supplies, etc.
• Sample copy of the standard lease 
• Copy of the latest environmental study (phase I or II) 
• Copies of all contracts relating to the facility, including those for Yellow Pages, pest control, software, security systems, waste removal, snow plowing, landscaping, etc.
• Copy of the most recent appraisal 
• A full-size copy of most recent “as built” survey 
• A copy of all building/site plans 
• Copies of letters and permits, including Certificates of Occupancy for each building, showing the municipality’s approval of use 
• Copies of any cell-tower leases 
• Copies of any billboard leases 
• Copies of commercial-tenant leases 
• Dates of break-ins for last three years with police-report file numbers 
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