PURCHASE AND SALE AGREEMENT
(Commercial Real Estate – Commonwealth of Kentucky)
[// GUIDANCE: This template is drafted for the fee simple purchase and sale of improved or unimproved commercial real property located in Kentucky. Bracketed items must be customized. Delete all guidance comments before final execution.]
TABLE OF CONTENTS
- Article I – Defined Terms
- Article II – Purchase and Sale; Purchase Price; Earnest Money
- Article III – Title, Survey, and Zoning Matters
- Article IV – Due Diligence; Condition of Property
- Article V – Closing; Deliverables
- Article VI – Representations and Warranties
- Article VII – Covenants
- Article VIII – Conditions Precedent
- Article IX – Default; Remedies
- Article X – Risk Allocation
- Article XI – Dispute Resolution
- Article XII – Miscellaneous
- Article XIII – Execution Blocks
ARTICLE I
DEFINED TERMS
The following capitalized terms shall have the meanings set forth below. Any term not defined in this Article I but defined elsewhere in this Agreement shall have the meaning ascribed to it therein.
“Agreement” means this Purchase and Sale Agreement dated as of the Effective Date.
“ALTA Survey” means an ALTA/NSPS Land Title Survey of the Property, certified to Buyer, [Title Company Name], and Buyer’s lender, dated within [___] days prior to Closing.
“Applicable Law” means all federal, state (including the Commonwealth of Kentucky), county, municipal, and local statutes, ordinances, codes, rules, regulations, and judicial or administrative orders applicable to the Property or the transactions contemplated herein.
“Business Day” means any day other than Saturday, Sunday, or a day on which national banking associations are authorized or required to close.
“Closing” means the consummation of the transaction contemplated hereby as provided in Section 5.1.
“Closing Date” means [___], or such other date as the Parties may mutually agree in writing.
“Deposit” has the meaning given in Section 2.2.
“Effective Date” means the date on which this Agreement has been executed by both Parties, as indicated on the signature pages.
“Environmental Laws” means all Applicable Law relating to environmental matters, including the release or threatened release of Hazardous Substances, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §§ 9601 et seq., and counterpart Kentucky statutes.
“Hazardous Substances” means any substance regulated under Environmental Laws, petroleum or petroleum products, asbestos-containing materials, and polychlorinated biphenyls.
“Property” means collectively (i) the real property described in Exhibit A, (ii) all buildings, fixtures, and other improvements located thereon, (iii) all easements, rights, and appurtenances relating thereto, and (iv) all Personal Property.
“Purchase Price” has the meaning given in Section 2.1.
“Title Company” means [Title Company Name], or such other title company mutually acceptable to the Parties.
[Additional defined terms inserted alphabetically as necessary.]
ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE; EARNEST MONEY
2.1 Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property on the terms and conditions set forth herein for an aggregate cash purchase price of [INSERT AMOUNT] U.S. Dollars (the “Purchase Price”), subject to adjustments and prorations as provided herein.
2.2 Deposit; Escrow.
(a) Within two (2) Business Days after the Effective Date, Buyer shall deposit [INSERT AMOUNT] U.S. Dollars (the “Deposit”) in immediately available funds with the Title Company, to be held in escrow pursuant to an escrow agreement consistent with this Article II.
(b) The Deposit shall be (i) credited to the Purchase Price at Closing, (ii) refunded to Buyer if Buyer terminates this Agreement in accordance with its express rights, or (iii) delivered to Seller as liquidated damages in the event of Buyer Default under Section 9.2.
[// GUIDANCE: Consider adding a non-refundable “independent consideration” amount to support enforceability under Kentucky contract law.]
2.3 Payment of Purchase Price. At Closing, Buyer shall pay the Purchase Price (less the Deposit) to Seller by wire transfer of immediately available funds to an account designated by Seller not later than two (2) Business Days prior to Closing.
2.4 Allocation of Purchase Price. Seller and Buyer shall reasonably allocate the Purchase Price among the land, improvements, and Personal Property and shall separately allocate consideration for any covenants not to compete or other intangible rights, all in accordance with Section 1060 of the Internal Revenue Code. Each Party shall report the transaction consistently with such allocation.
ARTICLE III
TITLE, SURVEY, AND ZONING MATTERS
3.1 Title Commitment. Within five (5) Business Days after the Effective Date, Seller shall cause the Title Company to deliver to Buyer a preliminary commitment for an ALTA owner’s policy of title insurance (the “Title Commitment”) together with legible copies of all instruments listed as exceptions (collectively, “Exception Documents”).
3.2 Buyer Review; Title Objections. Buyer shall have until the expiration of the Due Diligence Period to deliver written notice of any Title Objections. Seller shall have five (5) Business Days thereafter to elect to cure or not cure such Title Objections. Failure to so elect shall be deemed an election not to cure. If Seller elects not to cure, Buyer may (a) waive the uncured Title Objection(s) and proceed to Closing, or (b) terminate this Agreement and obtain a refund of the Deposit.
3.3 Survey and Zoning.
(a) Buyer shall obtain the ALTA Survey prior to the expiration of the Due Diligence Period.
(b) Seller represents that the current use of the Property is in material compliance with all Applicable Law, including zoning, land use, and building code requirements (see Section 6.1(d)).
(c) If the Survey or zoning report reveals Material Zoning Non-Compliance, Buyer may assert a Title Objection under Section 3.2.
3.4 Title Policy. At Closing, the Title Company shall issue to Buyer an ALTA owner’s policy of title insurance in the amount of the Purchase Price, insuring fee simple title to the Property subject only to Permitted Exceptions, with standard endorsements (the “Title Policy”). Seller shall pay the premium for a standard owner’s policy; Buyer shall pay the incremental cost of any extended coverage or endorsements.
ARTICLE IV
DUE DILIGENCE; CONDITION OF PROPERTY
4.1 Due Diligence Period. Buyer shall have until 5:00 p.m. Eastern Time on [_____ days after Effective Date] (the “Due Diligence Period”) to conduct, at its sole cost, any investigations, studies, inspections, and analyses of the Property deemed necessary or desirable by Buyer, including without limitation Phase I and, if warranted, Phase II environmental site assessments, building inspections, zoning and land-use verifications, and review of Service Contracts.
4.2 Access; Indemnity. Buyer, its agents, and consultants shall have reasonable access to the Property upon not less than twenty-four (24) hours’ prior notice to Seller, subject to the rights of any tenants. Buyer shall indemnify, defend, and hold Seller harmless from any Claims arising from Buyer’s entry on the Property, excluding any pre-existing conditions discovered by Buyer.
4.3 As-Is Condition; Reliance. Except as expressly stated in this Agreement and in Seller’s closing documents, Buyer acknowledges that it is acquiring the Property “AS IS, WHERE IS, WITH ALL FAULTS,” and that Seller makes no representation or warranty, express or implied, as to the physical, structural, or environmental condition of the Property or fitness for any particular purpose.
4.4 Right of Termination. Buyer may terminate this Agreement for any reason or no reason by written notice delivered to Seller prior to the expiration of the Due Diligence Period, in which event the Deposit shall be returned to Buyer, and neither Party shall have further liability hereunder except for Surviving Obligations.
ARTICLE V
CLOSING; DELIVERABLES
5.1 Closing Date and Location. The Closing shall occur on the Closing Date at the offices of the Title Company or by remotely exchanged electronic signatures and escrow funding.
5.2 Seller’s Closing Deliveries. At or before Closing, Seller shall deliver:
(a) Special Warranty Deed conveying fee simple title to the Property, subject only to Permitted Exceptions;
(b) Bill of Sale for the Personal Property;
(c) Assignment and Assumption of [Leases / Service Contracts], executed by Seller;
(d) FIRPTA Certificate;
(e) Beneficial Ownership Certification (FinCEN), if applicable;
(f) Owner’s Affidavit acceptable to the Title Company;
(g) Evidence of authority and organizational existence of Seller;
(h) Closing Statement executed by Seller; and
(i) Any additional documents reasonably required by the Title Company.
5.3 Buyer’s Closing Deliveries. At or before Closing, Buyer shall deliver:
(a) Funds sufficient to pay the Purchase Price and Buyer’s Closing Costs;
(b) Assignment and Assumption of [Leases / Service Contracts], executed by Buyer;
(c) Evidence of authority and organizational existence of Buyer;
(d) Closing Statement executed by Buyer; and
(e) Any additional documents reasonably required by the Title Company.
5.4 Closing Costs; Prorations. Closing costs shall be allocated as follows:
(a) Seller shall pay: (i) deed preparation and transfer tax, (ii) cost of the standard owner’s Title Policy premium, and (iii) one-half of the escrow fee.
(b) Buyer shall pay: (i) recording fees, (ii) costs of extended coverage and endorsements, (iii) cost of the ALTA Survey, (iv) due diligence costs, and (v) one-half of the escrow fee.
(c) Real property taxes, rents, and utilities shall be prorated as of 11:59 p.m. on the day preceding the Closing Date, based on the most recent assessment and millage rates available.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Seller’s Representations and Warranties. Seller represents and warrants to Buyer as of the Effective Date and as of Closing that:
(a) Authority. Seller is duly organized, validly existing, and in good standing under the laws of its state of formation and has full power and authority to enter into and perform this Agreement.
(b) Title. Seller is the fee simple owner of the Property, free and clear of all liens and encumbrances other than Permitted Exceptions.
(c) No Conflicts. The execution, delivery, and performance of this Agreement do not violate any agreement to which Seller is a party or by which Seller is bound.
(d) Zoning Compliance. To Seller’s Knowledge, the current use and operation of the Property materially comply with Applicable Law, including zoning and land-use ordinances.
(e) Environmental Matters. To Seller’s Knowledge, Seller has not received written notice of any pending or threatened investigation or claim under Environmental Laws relating to the Property.
(f) Litigation. There is no pending litigation, condemnation, or administrative proceeding relating to the Property that would materially interfere with the consummation of the transactions contemplated herein.
(g) Foreign Person. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code.
6.2 Buyer’s Representations and Warranties. Buyer represents and warrants to Seller as of the Effective Date and as of Closing that:
(a) Authority. Buyer is duly organized, validly existing, and in good standing under the laws of its state of formation and has full power and authority to enter into and perform this Agreement.
(b) No Conflicts. The execution, delivery, and performance of this Agreement do not violate any agreement to which Buyer is a party.
(c) Sophisticated Purchaser. Buyer is a sophisticated purchaser with experience in acquiring commercial real estate and has or will obtain adequate information concerning the Property.
6.3 Survival. The representations and warranties contained in this Article VI shall survive Closing for a period of [___] months (the “Survival Period”). Any claim based on a breach must be made in writing before expiration of the Survival Period.
ARTICLE VII
COVENANTS
7.1 Seller’s Covenants. Between the Effective Date and Closing, Seller shall:
(a) Operation. Operate and maintain the Property in substantially the same manner as prior to the Effective Date.
(b) Encumbrances. Not voluntarily create any liens or encumbrances that will survive Closing without Buyer’s prior written consent.
(c) New Contracts. Not enter into any new lease or service contract that is not terminable upon thirty (30) days’ notice without Buyer’s written consent (not to be unreasonably withheld).
(d) Access. Provide Buyer with reasonable access to the Property for inspections pursuant to Section 4.2.
7.2 Buyer’s Covenants. Buyer shall:
(a) Confidentiality. Keep all non-public information regarding the Property received from Seller confidential, subject to customary exceptions.
(b) Restoration. If Buyer terminates this Agreement, restore the Property to substantially the same condition existing immediately prior to Buyer’s entry, reasonable wear excepted.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Buyer’s Conditions. Buyer’s obligation to close is conditioned upon:
(a) Accuracy of Seller’s reps and warranties at Closing;
(b) Performance by Seller of all covenants and obligations;
(c) Issuance of the Title Policy;
(d) Receipt of estoppel certificates from [___]% of tenants (if applicable);
(e) Absence of Material Adverse Change with respect to the Property.
8.2 Seller’s Conditions. Seller’s obligation to close is conditioned upon:
(a) Accuracy of Buyer’s reps and warranties at Closing;
(b) Performance by Buyer of all covenants and obligations;
(c) Receipt of the Purchase Price.
ARTICLE IX
DEFAULT; REMEDIES
9.1 Seller Default. If Seller defaults and fails to cure within five (5) Business Days after written notice, Buyer may (a) terminate this Agreement and receive a refund of the Deposit plus reimbursement of out-of-pocket third-party due diligence costs not to exceed [CAP AMOUNT], or (b) seek specific performance of Seller’s obligations (injunctive relief expressly preserved), or (c) waive the default and proceed to Closing.
9.2 Buyer Default. If Buyer defaults and fails to cure within five (5) Business Days after written notice, Seller’s sole and exclusive remedy shall be to retain the Deposit as liquidated damages, the Parties acknowledging that actual damages would be difficult to ascertain. Seller waives any right to seek additional damages except in the event of Buyer’s willful or fraudulent misconduct.
[// GUIDANCE: Kentucky courts generally enforce liquidated damages clauses where damages are uncertain and the amount is reasonable in relation to anticipated loss.]
ARTICLE X
RISK ALLOCATION
10.1 Indemnification.
(a) Environmental Indemnity by Seller. Seller shall indemnify, defend, and hold Buyer harmless from and against any Claims arising out of (i) the presence or release of Hazardous Substances on, under, or migrating from the Property prior to Closing, or (ii) any violation of Environmental Laws prior to Closing.
(b) Environmental Indemnity by Buyer. Buyer shall indemnify, defend, and hold Seller harmless from and against any Claims arising out of (i) the presence or release of Hazardous Substances on, under, or migrating from the Property first occurring on or after Closing, or (ii) any violation of Environmental Laws first occurring on or after Closing.
10.2 Limitation of Liability. Except for fraud, willful misconduct, and the Environmental Indemnity, the aggregate liability of either Party for breaches of representations, warranties, and covenants shall not exceed [NEGOTIATED CAP AMOUNT] U.S. Dollars.
10.3 Insurance. Until Closing, Seller shall maintain its existing casualty and liability insurance policies. Buyer shall maintain commercially reasonable general liability insurance for pre-Closing inspections naming Seller as an additional insured.
10.4 Force Majeure. Neither Party shall be liable for delays or failures to perform caused by events beyond such Party’s reasonable control, including acts of God, war, terrorism, civil unrest, governmental action, or natural disaster; provided, however, that the foregoing shall not relieve either Party from timely payment of monetary obligations.
ARTICLE XI
DISPUTE RESOLUTION
11.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Kentucky, without regard to conflicts-of-law principles.
11.2 Forum Selection. Any suit, action, or proceeding arising out of or relating to this Agreement shall be brought exclusively in the state courts located in [County], Kentucky (and any appellate courts thereof). Each Party irrevocably submits to such jurisdiction and waives any objection based on venue or forum non conveniens.
11.3 Optional Arbitration. [OPTIONAL – SELECT ONE:
(a) The Parties agree that any dispute not resolved within thirty (30) days after written notice shall be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, held in [County], Kentucky, before a panel of one (1) arbitrator. Judgment upon the award may be entered in any court of competent jurisdiction. |
(b) The Parties decline to arbitrate any dispute under this Agreement.]
11.4 Jury Trial Waiver. [OPTIONAL – INCLUDE IF AGREED:
EACH PARTY HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.]
11.5 Specific Performance. The Parties acknowledge that the Property is unique and that monetary damages may be inadequate. Accordingly, in addition to any other remedies, the Parties shall be entitled to seek specific performance or other equitable relief to enforce the terms of this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices under this Agreement shall be in writing and deemed given (a) upon delivery by hand with signed receipt, (b) one (1) Business Day after being deposited with a nationally recognized overnight courier, or (c) upon confirmation of transmission if sent by email with a PDF attachment, addressed to the Parties at the addresses set forth below (or such other address as either Party may designate by notice).
12.2 Entire Agreement. This Agreement, together with the Exhibits and any instruments delivered pursuant hereto, constitutes the entire agreement between the Parties and supersedes all prior oral or written agreements regarding the Property.
12.3 Amendments and Waivers. No amendment or modification of this Agreement shall be effective unless in writing and signed by the Party against whom enforcement is sought. No waiver of any provision shall be deemed or shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver.
12.4 Assignment. Buyer may not assign its rights or delegate its duties under this Agreement without Seller’s prior written consent, except to an affiliate controlled by Buyer or its principals, provided Buyer remains liable hereunder.
12.5 Successors and Assigns. Subject to Section 12.4, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
12.6 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall continue in full force and effect, and the invalid provision shall be reformed to the minimum extent necessary to render it enforceable.
12.7 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, all of which together constitute one instrument. Signatures delivered electronically (e.g., via PDF or DocuSign) shall be deemed original signatures and fully effective.
12.8 Time of the Essence. Time is of the essence with respect to each obligation under this Agreement.
12.9 No Third-Party Beneficiaries. Nothing in this Agreement, express or implied, confers any right or remedy upon any person other than the Parties and their respective successors and permitted assigns.
ARTICLE XIII
EXECUTION BLOCKS
IN WITNESS WHEREOF, the Parties have executed this Purchase and Sale Agreement as of the Effective Date.
SELLER:
[SELLER NAME], a [state and entity type]
By: ____
Name: ____
Title: _____
Date: _________
[Corporate Acknowledgment and Notary Block – Commonwealth of Kentucky]
BUYER:
[BUYER NAME], a [state and entity type]
By: ____
Name: ____
Title: _____
Date: _________
[Corporate Acknowledgment and Notary Block – Commonwealth of Kentucky]
EXHIBIT A – Legal Description of the Land
[Insert metes and bounds or deed book/page reference]
EXHIBIT B – Personal Property
[List, if any]
EXHIBIT C – Form of Assignment and Assumption of Leases/Contracts
[Attach]
EXHIBIT D – Form of Bill of Sale
[Attach]
EXHIBIT E – FIRPTA Certificate
[Attach]
[// GUIDANCE: Confirm that deed form, notarization, and recording requirements satisfy KRS Chapter 382, including the mailing address for tax bill and preparation statement. Coordinate with Kentucky-licensed counsel or title attorney to ensure compliance with county clerk recording practices.]