COMMERCIAL REAL ESTATE
PURCHASE AND SALE AGREEMENT
(State of California)
[// GUIDANCE: This is a comprehensive, court-ready template for the purchase and sale of California commercial real estate. All bracketed language must be tailored to the specific transaction. Delete all guidance comments prior to execution.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Purchase and Sale; Purchase Price; Deposit
- Due Diligence; Title & Survey; Zoning Compliance
- Closing; Deliveries; Prorations
- Representations & Warranties
- Covenants
- Conditions Precedent
- Environmental Matters & Indemnification
- Default; Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
Purchase and Sale Agreement (“Agreement”)
Made as of [EFFECTIVE DATE] (the “Effective Date”)
Between:
-
[SELLER LEGAL NAME], a [STATE OF ORGANIZATION] [ENTITY TYPE]
Address: [ADDRESS]
(“Seller”) -
[PURCHASER LEGAL NAME], a [STATE OF ORGANIZATION] [ENTITY TYPE]
Address: [ADDRESS]
(“Purchaser”)
Seller agrees to sell and Purchaser agrees to purchase the Property (defined below) on the terms set forth herein for good and valuable consideration, the receipt and sufficiency of which are acknowledged.
Governing Law: State of California
Selected Forum: California state courts sitting in [COUNTY], California
Specific Performance: Preserved as an equitable remedy
2. DEFINITIONS
For ease of reference, the following capitalized terms have the meanings set forth below (alphabetically arranged):
“AS-IS CONDITION” – The physical, environmental, and legal condition of the Property, subject only to Seller’s express representations and warranties herein.
“Business Day” – Any day other than Saturday, Sunday, or a California or federal holiday.
“Closing” – The consummation of the transaction through recordation of the Deed and delivery of all Closing Deliveries, anticipated on the Closing Date.
“Closing Date” – [CLOSING DATE] or such other date as the parties may mutually agree in writing.
“Deposit” – The earnest money in the amount of $[AMOUNT] to be delivered by Purchaser to Escrow Agent pursuant to Section 3.2.
“Deed” – The Grant Deed conveying fee title to the Property, substantially in the form of Exhibit A.
“Due Diligence Period” – The period commencing on the Effective Date and expiring at 5:00 p.m. Pacific Time on the date that is [NUMBER] days thereafter.
“Environmental Laws” – Any applicable federal, state, or local statute, regulation, ordinance, code, or common-law doctrine relating to pollution, hazardous substances, or protection of health, safety, or the environment, including but not limited to the Comprehensive Environmental Response, Compensation, and Liability Act and the California Health & Safety Code.
“Escrow Agent” – [TITLE COMPANY NAME], [ADDRESS], File No. [FILE NO.].
“Hazardous Materials” – Any substance defined, listed, or otherwise classified pursuant to Environmental Laws as hazardous, toxic, a pollutant, or contaminant, including petroleum products and asbestos-containing materials.
“Inspection Materials” – All documents, reports, communications, analyses, and data obtained or generated by Purchaser regarding the Property.
“Property” – Collectively, (a) the real property located at [STREET ADDRESS], County of [COUNTY], State of California, and legally described on Exhibit B (the “Land”); (b) all improvements situated thereon (the “Improvements”); (c) all appurtenant rights, easements, and hereditaments; (d) all fixtures, equipment, and personal property owned by Seller and located on or used in connection with the Land (the “Personal Property”); and (e) Seller’s interest in assignable contracts, warranties, licenses, permits, and approvals relating solely to the Property (the “Intangibles”).
“Purchase Price” – $[AMOUNT], subject to adjustment and prorations pursuant hereto.
“Title Company” – The Escrow Agent, in its capacity as title insurer, which shall issue the Title Policy.
“Title Policy” – An ALTA extended-coverage owner’s policy insuring fee title to the Land and Improvements in Purchaser, subject only to Permitted Exceptions and in the amount of the Purchase Price.
3. PURCHASE AND SALE; PURCHASE PRICE; DEPOSIT
3.1 Purchase and Sale. Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from Seller, the Property for the Purchase Price, subject to the terms of this Agreement.
3.2 Deposit.
(a) Initial Deposit. Within two (2) Business Days after mutual execution, Purchaser shall deposit the sum of $[AMOUNT] (the “Initial Deposit”) with Escrow Agent by wire transfer.
(b) Additional Deposit. Provided Purchaser has not terminated this Agreement prior to the expiration of the Due Diligence Period, Purchaser shall deposit an additional $[AMOUNT] (the “Additional Deposit,” together with the Initial Deposit, the “Deposit”).
(c) Disposition. The Deposit shall be applied to the Purchase Price at Closing or delivered to Seller or Purchaser as expressly provided herein. Interest earned shall accrue for the benefit of the party ultimately entitled to the Deposit.
3.3 Payment of Purchase Price. At Closing, Purchaser shall deliver:
(i) the Purchase Price less the Deposit and subject to prorations and credits, by federal wire transfer of immediately available funds to Escrow Agent; and
(ii) all other funds required to close in accordance with the closing statement.
4. DUE DILIGENCE; TITLE & SURVEY; ZONING COMPLIANCE
4.1 Access. During the Due Diligence Period, Purchaser and its agents may enter the Property at reasonable times to conduct inspections, tests, and investigations, provided Purchaser:
(a) gives at least twenty-four (24) hours’ prior notice;
(b) restores any physical disturbance; and
(c) carries commercial general liability insurance with limits of not less than $[LIMITS], naming Seller as an additional insured.
4.2 Title & Survey.
(a) Seller shall cause the Title Company to deliver to Purchaser (i) a current commitment for the Title Policy, and (ii) legible copies of all underlying title documents.
(b) Purchaser shall obtain at its expense an ALTA/NSPS survey.
(c) Purchaser shall have until the expiration of the Due Diligence Period to deliver written notice (“Title Objection Notice”) of any matters that render title unacceptable. Seller may elect to cure within five (5) Business Days after receipt of the Title Objection Notice. If Seller declines or fails to cure, Purchaser may elect to (i) terminate this Agreement and receive a return of the Deposit, or (ii) waive the objection and proceed to Closing. Untimely or waived objections become “Permitted Exceptions.”
4.3 Zoning Compliance. Seller represents that, to Seller’s Knowledge, the current use of the Property as [CURRENT USE] is a legal, conforming use under applicable zoning ordinances. Purchaser shall verify zoning during the Due Diligence Period.
4.4 Termination. Purchaser may terminate this Agreement by written notice anytime prior to the expiration of the Due Diligence Period for any reason or no reason, whereupon Escrow Agent shall promptly return the Deposit to Purchaser and neither party shall have further obligation, except for obligations that expressly survive termination.
5. CLOSING; DELIVERIES; PRORATIONS
5.1 Closing. Closing shall occur on the Closing Date through escrow with the Escrow Agent.
5.2 Seller Closing Deliveries. Seller shall deliver into escrow:
(a) The Deed, duly executed and acknowledged;
(b) A Bill of Sale and Assignment of Intangibles, substantially in the form of Exhibit C;
(c) FIRPTA Certificate;
(d) Bring-down certificate of representations and warranties;
(e) Keys and access codes;
(f) Evidence of authority and good standing; and
(g) Any additional documents reasonably required by Escrow Agent or Title Company.
5.3 Purchaser Closing Deliveries. Purchaser shall deliver into escrow:
(a) The balance of the Purchase Price;
(b) Counterpart signature pages to the Bill of Sale and Assignment;
(c) Evidence of authority and good standing; and
(d) Such other documents as Escrow Agent or Title Company reasonably require.
5.4 Prorations and Closing Costs.
(a) Taxes, assessments (both general and special), rents, operating expenses, utilities, and other revenue or expense items normally prorated in California commercial real estate transactions shall be prorated as of 12:01 a.m. on the Closing Date, with Seller responsible for the day of Closing.
(b) Escrow Fee: 50% Seller, 50% Purchaser.
(c) Title Policy Premium: Seller.
(d) Purchaser’s Lender’s Title Policy and endorsements: Purchaser.
(e) Documentary transfer tax and recording fees: Seller.
6. REPRESENTATIONS & WARRANTIES
6.1 Seller’s Representations. As a material inducement to Purchaser to enter this Agreement, Seller represents and warrants to Purchaser as of the Effective Date and again as of Closing:
(a) Authority. Seller is duly organized, validly existing, and in good standing under the laws of its state of formation and has full power to execute and perform this Agreement.
(b) Title. Seller owns fee simple title to the Land and Improvements, free and clear of all liens other than Permitted Exceptions.
(c) No Condemnation. Seller has not received written notice of any pending or threatened eminent domain proceedings affecting the Property.
(d) Compliance with Laws. Seller has not received written notice of violation of any Environmental Laws, zoning, building, fire, or health codes that remains uncured.
(e) Hazardous Materials. Except as disclosed in the environmental reports delivered to Purchaser, Seller has not generated, stored, or disposed of Hazardous Materials on the Property in violation of Environmental Laws.
(f) Litigation. No litigation or arbitration is pending or, to Seller’s Knowledge, threatened against Seller that would materially adversely affect Seller’s ability to perform its obligations.
(g) Leases and Contracts. Each lease and service contract listed on Schedule 1 is in full force and effect, and Seller has delivered true and complete copies to Purchaser.
All representations and warranties of Seller shall survive Closing for a period of [SURVIVAL PERIOD] months, except for the representations contained in Sections 6.1(b) (Title) and 6.1(e) (Hazardous Materials), which shall survive indefinitely.
6.2 Purchaser’s Representations. Purchaser represents and warrants to Seller:
(a) Authority. Purchaser is duly organized, validly existing, and has full power to execute and perform this Agreement.
(b) Funds. Purchaser has, or on Closing will have, sufficient funds to pay the Purchase Price and consummate the transaction.
(c) Independent Evaluation. Purchaser is a sophisticated buyer experienced in commercial real estate and has had the opportunity to conduct, and has conducted or will conduct, its own inspections and investigations of the Property.
7. COVENANTS
7.1 Seller’s Covenants. From the Effective Date through Closing:
(a) Operations. Seller shall operate and maintain the Property in substantially the same manner as before the Effective Date, reasonable wear and tear excepted.
(b) New Contracts. Seller shall not enter into any lease, service contract, or agreement affecting the Property (other than those terminable on thirty (30) days’ notice without penalty) without Purchaser’s prior written consent, which shall not be unreasonably withheld.
(c) Hazardous Materials. Seller shall not cause or permit the release of Hazardous Materials on the Property.
(d) Notice. Seller shall promptly give Purchaser written notice of any event or condition that becomes known to Seller and that would make any representation or warranty materially untrue or inaccurate.
7.2 Purchaser’s Covenants.
(a) Confidentiality. Purchaser shall keep confidential all Inspection Materials except as required by law or in connection with financing.
(b) Indemnity for Entry. Purchaser shall indemnify and hold harmless Seller against claims arising from Purchaser’s entry onto the Property, except to the extent arising from Seller’s negligence or misconduct.
8. CONDITIONS PRECEDENT
8.1 Purchaser’s Conditions. Purchaser’s obligation to close is subject to the satisfaction (or written waiver by Purchaser) of the following:
(a) Accuracy of Representations. Seller’s representations and warranties shall be true and correct in all material respects.
(b) Performance of Covenants. Seller shall have performed and complied with its covenants hereunder.
(c) Title Policy. Title Company shall be irrevocably committed to issue the Title Policy to Purchaser.
(d) Deliveries. Seller shall have delivered the Seller Closing Deliveries.
8.2 Seller’s Conditions. Seller’s obligation to close is subject to:
(a) Accuracy of Purchaser’s Representations and Warranties;
(b) Performance of Purchaser’s Covenants; and
(c) Delivery of the Purchase Price and Purchaser Closing Deliveries.
9. ENVIRONMENTAL MATTERS & INDEMNIFICATION
9.1 Environmental Indemnity.
(a) From and after Closing, Seller shall indemnify, defend, and hold harmless Purchaser and its affiliates, successors, and assigns from any and all losses, claims, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) arising out of (i) any pre-Closing release, disposal, or presence of Hazardous Materials on, under, or migrating from the Property; or (ii) any breach of Seller’s representations in Section 6.1(e).
(b) The indemnity in this Section 9.1 shall survive Closing indefinitely and shall not be subject to any limitation of liability or cap, except that Seller’s aggregate liability hereunder shall not exceed $[NEGOTIATED CAP] if the parties insert such a cap here.
[// GUIDANCE: Environmental indemnity is intentionally broad; consider obtaining environmental insurance or adjusting caps as negotiated.]
10. DEFAULT; REMEDIES
10.1 Seller Default. If Seller defaults prior to Closing and fails to cure within five (5) Business Days after written notice, Purchaser may either (a) terminate this Agreement and receive an immediate refund of the Deposit plus reimbursement of third-party out-of-pocket due diligence costs not to exceed $[CAP]; or (b) seek specific performance. Notwithstanding the foregoing, Purchaser expressly waives any claim for consequential or punitive damages.
10.2 Purchaser Default. If Purchaser defaults prior to Closing and fails to cure within five (5) Business Days after written notice, Seller’s sole remedy shall be to terminate this Agreement and receive the Deposit as liquidated damages. The parties acknowledge that Seller’s actual damages would be difficult to ascertain and that the Deposit is a reasonable estimate thereof. THE PARTIES EXPRESSLY WAIVE CALIFORNIA CIVIL CODE § 3389 TO THE EXTENT IT WOULD PRECLUDE ENFORCEMENT OF THIS LIQUIDATED DAMAGES PROVISION. Seller’s Initials: _ Purchaser’s Initials: _
10.3 Attorneys’ Fees. The prevailing party in any action or proceeding arising out of this Agreement shall be entitled to recover reasonable attorneys’ fees and costs.
11. RISK ALLOCATION
11.1 AS-IS. SUBJECT TO SELLER’S EXPRESS REPRESENTATIONS AND WARRANTIES, PURCHASER ACKNOWLEDGES THAT IT WILL ACQUIRE THE PROPERTY “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS,” AND THAT SELLER DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
11.2 Limitations of Liability. Except for fraud or the environmental indemnity in Section 9.1, Seller’s liability under this Agreement shall not exceed $[NEGOTIATED CAP] in the aggregate.
11.3 Insurance.
(a) From the Effective Date until Closing, Seller shall maintain its existing property and liability insurance coverages.
(b) At Closing, risk of loss shall transfer to Purchaser. If, prior to Closing, casualty or condemnation affects more than [PERCENTAGE]% of the Property’s floor area or results in damages exceeding $[THRESHOLD], Purchaser may elect to terminate this Agreement or proceed and receive any insurance proceeds or condemnation awards.
11.4 Force Majeure. Neither party shall be liable for failure to perform caused by events beyond its reasonable control, including acts of God, war, terrorism, or governmental delays, provided the affected party gives prompt written notice and resumes performance when the force majeure event ends.
12. DISPUTE RESOLUTION
12.1 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without regard to conflict-of-laws rules.
12.2 Forum Selection. Any action arising under this Agreement shall be instituted exclusively in the state courts of the State of California located in [COUNTY], and each party irrevocably submits to such jurisdiction.
12.3 Arbitration (Optional). [IF SELECTED] Any dispute arising under this Agreement shall, at the election of either party by written notice given within ten (10) days after service of a complaint, be resolved by binding arbitration administered by JAMS in accordance with its Comprehensive Arbitration Rules. Judgment on the award may be entered in any court of competent jurisdiction. The arbitration shall take place in [CITY, CA] before a single arbitrator who is a retired California trial or appellate judge with at least ten (10) years’ real estate experience.
12.4 Jury Trial Waiver (Optional). TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.
12.5 Specific Performance. The parties agree that the Property is unique and that monetary damages may be inadequate; therefore, each party shall have the right to seek specific performance or injunctive relief in addition to other remedies.
13. GENERAL PROVISIONS
13.1 Notices. Any notice must be in writing and delivered (i) by personal delivery, (ii) by nationally recognized overnight courier, or (iii) by electronic mail (PDF) with confirmation of transmission, to the addresses set forth in the header (or such other address as a party may designate by notice). Notice is effective on the date of delivery (or deemed delivery in the case of refusal).
13.2 Amendment; Waiver. This Agreement may be amended only by a written instrument executed by both parties. No waiver is effective unless in writing and signed by the party against whom enforcement is sought.
13.3 Assignment. Purchaser may assign its rights only to (i) an entity controlling, controlled by, or under common control with Purchaser, or (ii) a single-purpose entity formed to acquire the Property, provided Purchaser remains liable for all obligations. Any other assignment requires Seller’s prior written consent, which may be granted or withheld in Seller’s sole discretion.
13.4 Successors and Assigns. Subject to Section 13.3, this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.
13.5 Severability. If any provision is determined to be invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be construed to reflect the parties’ original intent to the extent permitted by law.
13.6 Entire Agreement. This Agreement, including the Exhibits and Schedules hereto, constitutes the entire agreement between the parties regarding the subject matter, and supersedes all prior or contemporaneous oral or written agreements.
13.7 Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures delivered electronically (e.g., via DocuSign or PDF) shall be deemed original signatures and fully enforceable.
13.8 Time of Essence. Time is of the essence with respect to every provision of this Agreement.
13.9 Interpretation. The headings are for convenience only and shall not affect interpretation. References to “including” mean “including, without limitation.”
13.10 No Third-Party Beneficiaries. Nothing in this Agreement confers any rights upon any person other than the parties and their permitted successors and assigns.
14. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
SELLER:
[SELLER LEGAL NAME],
a [STATE] [ENTITY TYPE]
By: _____
Name: ____
Title: ____
Date: ____
[Corporate acknowledgment and notary block, if required]
PURCHASER:
[PURCHASER LEGAL NAME],
a [STATE] [ENTITY TYPE]
By: _____
Name: ____
Title: ____
Date: ____
[Corporate acknowledgment and notary block, if required]
EXHIBITS
Exhibit A – Form of Grant Deed
Exhibit B – Legal Description of Land
Exhibit C – Bill of Sale and Assignment of Intangibles
Schedule 1 – Leases and Service Contracts
[// GUIDANCE: Add additional exhibits (environmental reports, estoppel certificates, disclosures) as appropriate. Verify county-specific deed requirements (font size, margins, transfer tax affidavit) before recording.]