PURCHASE AND SALE AGREEMENT
(Commercial Real Estate – Michigan)
[// GUIDANCE: Delete this guidance block after customization.
This template is drafted for the purchase and sale of commercial real property located in the State of Michigan (“MI”). It incorporates (i) Michigan-specific environmental, zoning, and title considerations; (ii) optional alternative dispute resolution mechanisms; and (iii) defensive drafting techniques intended to withstand judicial scrutiny. All bracketed items (e.g., [PURCHASE PRICE]) are variables that must be completed or conformed by counsel prior to execution.]
TABLE OF CONTENTS
- Defined Terms
- Agreement to Purchase and Sell
- Earnest Money Deposit; Escrow
- Due Diligence
- Conditions Precedent
- Representations and Warranties
- Covenants
- Environmental Matters and Indemnification
- Closing; Deliverables; Prorations
- Risk of Loss and Condemnation
- Default and Remedies
- Dispute Resolution
- Miscellaneous Provisions
- Execution Block
Exhibits
AGREEMENT
This PURCHASE AND SALE AGREEMENT (this “Agreement”) is made effective as of [EFFECTIVE DATE] (the “Effective Date”), by and between:
[SELLER LEGAL NAME], a [STATE AND TYPE OF ENTITY], having an address at [SELLER ADDRESS] (“Seller”),
and
[PURCHASER LEGAL NAME], a [STATE AND TYPE OF ENTITY], having an address at [PURCHASER ADDRESS] (“Purchaser”).
Seller and Purchaser are each a “Party” and, collectively, the “Parties.”
RECITALS
A. Seller is the fee simple owner of certain real property located in [CITY/TOWNSHIP, COUNTY], Michigan, more particularly described on Exhibit A (the “Land”), together with all improvements thereon and all related rights, easements, licenses, privileges, and appurtenances (collectively with the Land, the “Real Property”).
B. Seller desires to sell, and Purchaser desires to purchase, the Real Property and the other Property (as defined below) on the terms and subject to the conditions set forth in this Agreement.
C. The Parties enter into this Agreement in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are acknowledged.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated herein, and the mutual undertakings herein set forth, the Parties hereby agree as follows:
1. DEFINED TERMS
For ease of reference, the following capitalized terms shall have the meanings indicated below. All section cross-references are to this Agreement unless otherwise noted.
“Affiliate” – Any entity controlling, controlled by, or under common control with a Party.
“Agreement” – This Purchase and Sale Agreement, including all Exhibits and Schedules, as amended from time to time.
“Applicable Law” – All federal, state, county, municipal, and local statutes (including, without limitation, Michigan real estate, zoning, and environmental statutes), regulations, ordinances, codes, rules, and legally binding orders applicable to the Property or either Party’s obligations hereunder.
“Business Day” – Any day other than Saturday, Sunday, or a federal holiday.
“Closing” – The consummation of the transaction contemplated hereby, to occur on the Closing Date.
“Closing Date” – The date on which Closing occurs, which shall be [TARGET CLOSING DATE], or such earlier or later date as the Parties may agree in writing, subject to extension pursuant to Section 5.
“Deposit” – The earnest money deposit described in Section 3.1.
“Due Diligence Documents” – The documents and materials described in Section 4.2.
“Due Diligence Period” – The period commencing on the Effective Date and expiring at 5:00 p.m. (local Michigan time) on the date that is [NUMBER] calendar days thereafter.
“Environmental Laws” – All Applicable Laws relating to pollution, protection of human health or the environment, or the presence, use, generation, transport, storage, treatment, or disposal of Hazardous Materials.
“Hazardous Materials” – Any substance, material, or waste regulated by Environmental Laws, including, without limitation, asbestos-containing materials, petroleum, polychlorinated biphenyls (PCBs), lead-based paint, and mold.
“Property” – Collectively, the Real Property, any personal property, intangible rights, licenses, permits, plans, contracts, and warranties associated with the Real Property and to be conveyed pursuant to this Agreement.
“Survey” – An ALTA/NSPS Land Title Survey of the Real Property prepared in accordance with Section 4.3(b).
“Title Commitment” – The commitment for an owner’s title insurance policy described in Section 4.3(a).
[// GUIDANCE: Add additional definitions as necessary.]
2. AGREEMENT TO PURCHASE AND SELL
2.1 Purchase and Sale. Seller hereby agrees to sell, convey, and assign to Purchaser, and Purchaser agrees to purchase from Seller, all of Seller’s right, title, and interest in and to the Property, upon the terms and subject to the conditions of this Agreement.
2.2 Purchase Price. The total purchase price for the Property shall be [PURCHASE PRICE] U.S. Dollars (the “Purchase Price”), payable as follows:
(a) Deposit – [DEPOSIT AMOUNT] (Section 3.1);
(b) Balance – The balance of the Purchase Price, subject to credits, prorations, and adjustments, shall be delivered by Purchaser at Closing via federal wire transfer of immediately available funds.
2.3 Allocation of Purchase Price. The Parties shall cooperate to mutually agree upon an allocation of the Purchase Price among the Real Property and any personal property in accordance with Section 1060 of the Internal Revenue Code. [// GUIDANCE: Allocation schedule often attached as Exhibit H.]
2.4 Conveyance. Seller shall convey fee simple title to the Real Property to Purchaser by duly executed warranty deed subject only to Permitted Exceptions (as defined in Section 4.3).
3. EARNEST MONEY DEPOSIT; ESCROW
3.1 Deposit. Within two (2) Business Days after the Effective Date, Purchaser shall deposit the Deposit with [ESCROW AGENT] (“Escrow Agent”) by wire transfer. Escrow Agent shall hold the Deposit in an interest-bearing account (with interest accruing to Purchaser) and shall disburse the Deposit pursuant to this Agreement.
3.2 Application of Deposit.
(a) Credit at Closing – If Closing occurs, the Deposit shall be applied to the Purchase Price.
(b) Termination – If this Agreement is terminated in accordance with its terms, Escrow Agent shall disburse the Deposit as expressly provided herein.
3.3 Independent Consideration. [OPTIONAL] A non-refundable sum of $100 of the Deposit (the “Independent Contract Consideration”) shall be delivered to Seller as independent consideration for Seller’s execution of this Agreement and shall be retained by Seller in all events.
4. DUE DILIGENCE
4.1 Access. During the Due Diligence Period, Purchaser and its Representatives may enter upon the Real Property at reasonable times for inspections, surveys, environmental assessments, zoning and code compliance investigations, and other customary studies, provided Purchaser (i) gives at least one (1) Business Day’s prior notice to Seller, and (ii) restores any physical disturbance.
4.2 Document Delivery. Within [NUMBER] Business Days after the Effective Date, Seller shall make available to Purchaser, to the extent in Seller’s possession or control, copies of:
(a) title policies; (b) surveys; (c) environmental reports; (d) zoning letters or approvals; (e) leases, service contracts, and warranties; (f) real estate tax bills; and (g) any governmental notices relating to the Property (collectively, the “Due Diligence Documents”).
4.3 Title, Survey, and Zoning Review.
(a) Title Commitment – Purchaser shall obtain, at Purchaser’s expense, a current commitment for an owner’s policy of title insurance (the “Title Commitment”) issued by [TITLE COMPANY] (“Title Company”), together with copies of all exception documents.
(b) Survey – Purchaser may obtain, at Purchaser’s expense, a current ALTA/NSPS Land Title Survey for the Property (the “Survey”).
(c) Zoning – Purchaser may obtain a zoning compliance letter or report confirming the current zoning classification, permitted uses, and compliance status of the Property.
(d) Objection Notice – Purchaser may deliver written notice (“Title/Zoning Objection Notice”) of any title, survey, zoning, or other objections (collectively, “Objections”) on or before the end of the Due Diligence Period.
(e) Seller Cure – Seller may elect (but is not obligated) to cure Objections within [NUMBER] days after receipt of the Title/Zoning Objection Notice.
(f) Failure to Cure – If Seller elects or is deemed to have elected not to cure, Purchaser shall, within [NUMBER] days, elect either (i) to accept title subject to the uncured Objections (which shall then become “Permitted Exceptions”), or (ii) to terminate this Agreement, in which event the Deposit shall be returned to Purchaser, less the Independent Contract Consideration (if applicable), and neither Party shall have further liability.
4.4 Environmental Inspections. Purchaser may commission Phase I Environmental Site Assessments, and, if recommended, Phase II investigations. [// GUIDANCE: Alter scope of environmental testing as desired.] Seller shall reasonably cooperate with Purchaser’s environmental consultants.
4.5 Termination During Due Diligence. Purchaser may, in its sole discretion, terminate this Agreement by written notice to Seller on or before expiration of the Due Diligence Period, in which event the Deposit shall be returned to Purchaser, less the Independent Contract Consideration (if applicable).
5. CONDITIONS PRECEDENT
5.1 Purchaser’s Conditions. Purchaser’s obligation to Close is subject to satisfaction or written waiver of the following conditions on or before the Closing Date:
(a) Title Company shall be irrevocably committed to issue, at Closing, an ALTA owner’s policy of title insurance in the full amount of the Purchase Price insuring good and marketable fee simple title to the Real Property, subject only to Permitted Exceptions.
(b) Seller’s representations and warranties shall be true and correct in all material respects as of Closing.
(c) Seller shall have performed and complied, in all material respects, with its covenants and obligations hereunder.
(d) No Material Adverse Change shall have occurred.
(e) Receipt of all governmental approvals, third-party consents, and estoppels reasonably required by Purchaser.
5.2 Seller’s Conditions. Seller’s obligation to Close is subject to:
(a) Purchaser’s delivery of the Purchase Price (less Deposit) and all required Closing deliverables;
(b) Purchaser’s representations and warranties being true and correct in all material respects; and
(c) Purchaser’s performance of its covenants hereunder.
5.3 Failure of Conditions. If any condition precedent is not satisfied or waived on or before the Closing Date, the Party whose obligation is conditioned may terminate this Agreement by written notice, and Section 10.3 shall apply as applicable.
6. REPRESENTATIONS AND WARRANTIES
6.1 Seller’s Representations and Warranties. Seller represents and warrants to Purchaser, 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 to execute and perform this Agreement.
(b) Title – Seller is the fee simple owner of the Real Property, free and clear of all liens other than Permitted Exceptions.
(c) Conflicts – Neither the execution nor performance of this Agreement violates any material contract or Applicable Law binding on Seller.
(d) Zoning Compliance – To Seller’s Knowledge, the current use and operation of the Real Property is in material compliance with applicable zoning and land-use ordinances.
(e) Environmental – Except as disclosed in the Due Diligence Documents, Seller has not received written notice of any unremediated violation of Environmental Laws with respect to the Property.
(f) Litigation – There is no pending or, to Seller’s Knowledge, threatened action materially affecting the Property or Seller’s ability to consummate 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 Purchaser’s Representations and Warranties. Purchaser represents and warrants to Seller that:
(a) Authority – Purchaser 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) Conflicts – Neither the execution nor performance of this Agreement violates any material contract or Applicable Law binding on Purchaser.
(c) Financial Capacity – Purchaser has, and at Closing will have, sufficient funds to consummate the transaction.
6.3 Survival; Cap. Seller’s and Purchaser’s representations and warranties shall survive Closing for [12] months. Seller’s aggregate liability for breach of its representations and warranties shall not exceed [LIABILITY CAP OR “NO CAP”] plus reasonable attorneys’ fees. [// GUIDANCE: Increase or decrease duration and cap as negotiated.]
7. COVENANTS
7.1 Seller’s Covenants Prior to Closing. Seller shall:
(a) Operations – Operate and maintain the Property in substantially the same manner as prior to the Effective Date, reasonable wear and tear excepted.
(b) Alterations – Not make material alterations to the Property or enter into any lease or service contract that cannot be terminated at Closing without Purchaser’s prior written consent (not to be unreasonably withheld).
(c) Notices – Promptly deliver to Purchaser copies of any notices received relating to the Property, including zoning, environmental, or condemnation matters.
(d) Title – Not voluntarily encumber the Property without Purchaser’s consent.
7.2 Purchaser’s Covenants. Purchaser shall:
(a) Conduct any on-site inspections in compliance with Applicable Law and shall indemnify Seller from mechanic’s liens arising from Purchaser’s entry.
(b) Maintain in force commercial general liability insurance with not less than [\$2,000,000] combined single limit covering Purchaser’s due diligence activities.
8. ENVIRONMENTAL MATTERS AND INDEMNIFICATION
8.1 Environmental Indemnity. From and after Closing, Seller shall indemnify, defend, and hold harmless Purchaser, its successors and assigns, from and against any and all Losses arising from (a) any Hazardous Materials released or existing on, under, or migrating from the Real Property prior to Closing, and (b) any violation of Environmental Laws related to pre-Closing conditions. This indemnity shall survive Closing indefinitely and shall not be subject to the limitation of liability cap in Section 6.3. [// GUIDANCE: Scope and duration of indemnity frequently negotiated.]
8.2 Purchaser’s Environmental Indemnity. Purchaser shall indemnify, defend, and hold harmless Seller from and against Losses caused by Purchaser’s introduction of Hazardous Materials to the Property after the Closing Date.
8.3 No Reliance; “AS-IS.” EXCEPT FOR SELLER’S EXPRESS REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, HABITABILITY, SUITABILITY, AND FITNESS FOR A PARTICULAR PURPOSE, AND PURCHASER AGREES TO ACCEPT THE PROPERTY ON AN “AS-IS, WHERE-IS” BASIS. Purchaser acknowledges that it has had (or will have) the opportunity to conduct such investigations of the Property deemed necessary.
9. CLOSING; DELIVERABLES; PRORATIONS
9.1 Closing Logistics. Closing shall take place via escrow with the Title Company, on the Closing Date, or at such other place, time, and manner as the Parties agree.
9.2 Seller’s Deliverables. At Closing, Seller shall deliver to Escrow Agent:
(a) Warranty deed;
(b) Bill of sale for personal property (if any);
(c) Assignment and assumption of contracts, warranties, licenses, and permits;
(d) FIRPTA affidavit;
(e) Owner’s affidavit and gap indemnity acceptable to the Title Company;
(f) Closing statement;
(g) Keys, codes, plans, and specifications; and
(h) Such additional documents reasonably required by the Title Company.
9.3 Purchaser’s Deliverables. At Closing, Purchaser shall deliver to Escrow Agent:
(a) The Purchase Price balance;
(b) Counterpart signature pages to all documents to be executed by Purchaser;
(c) Closing statement; and
(d) Such additional documents reasonably required by the Title Company.
9.4 Prorations and Closing Costs.
(a) Taxes – Real estate taxes and assessments shall be prorated as of 11:59 p.m. on the day preceding the Closing Date based on the latest available tax bill or, at Purchaser’s option, on a due-date basis.
(b) Revenues and Expenses – Rents, if any, and operating expenses shall be prorated on an accrual basis.
(c) Title Premium – [Party] shall pay the owner’s title insurance premium; endorsements shall be paid by [Party].
(d) Transfer Taxes – Michigan transfer taxes and recording fees shall be paid by [Party] in accordance with Applicable Law.
(e) Escrow Fee – Split equally between the Parties.
10. RISK OF LOSS AND CONDEMNATION
10.1 Casualty. If prior to Closing the Property suffers a casualty loss exceeding [CASUALTY THRESHOLD] or materially interfering with the current use, Purchaser may elect, within ten (10) days after notice of such casualty, either (a) to terminate this Agreement and receive a refund of the Deposit, or (b) to proceed to Closing, in which event Seller shall assign to Purchaser all insurance proceeds and credit Purchaser the deductible amount.
10.2 Condemnation. If prior to Closing any material condemnation or eminent domain proceeding is commenced, Purchaser may elect, within ten (10) days after receipt of notice, to terminate this Agreement with refund of the Deposit or proceed to Closing, in which case any condemnation award shall be assigned to Purchaser.
11. DEFAULT AND REMEDIES
11.1 Seller Default. If Seller materially breaches this Agreement and fails to cure within five (5) Business Days after written notice from Purchaser, Purchaser may either:
(a) Terminate – Terminate this Agreement and receive an immediate return of the Deposit and reimbursement of documented out-of-pocket third-party costs not to exceed [CAP ON COST REIMBURSEMENT]; or
(b) Specific Performance – Seek specific performance of Seller’s obligations (Section 11.3), which remedy the Parties agree is available because the Property is unique and monetary damages would be inadequate.
11.2 Purchaser Default. If Purchaser materially breaches this Agreement and fails to cure within five (5) Business Days after written notice from Seller, Seller’s sole and exclusive remedy shall be to terminate this Agreement and retain the Deposit as liquidated damages, it being agreed that actual damages are difficult to ascertain and the Deposit constitutes a reasonable estimate thereof. [// GUIDANCE: Some Sellers prefer right to seek actual damages; revise if needed.]
11.3 Specific Performance. Nothing in Section 11.2 shall limit Seller’s right to enforce any post-Closing covenants or indemnities. Equitable relief (including specific performance and injunctive relief) shall be available to the non-defaulting Party for any default hereunder, subject to the express limitations of liability herein.
11.4 Attorneys’ Fees. The prevailing Party in any legal action or proceeding arising out of this Agreement shall be entitled to reimbursement of its reasonable attorneys’ fees and costs.
12. DISPUTE RESOLUTION
12.1 Governing Law. This Agreement and all disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of Michigan, without regard to choice-of-law principles.
12.2 Forum Selection. Subject to Section 12.3, the Parties irrevocably submit to the exclusive jurisdiction of the state courts of competent jurisdiction situated in [COUNTY], Michigan, and waive any objection based on forum non conveniens.
12.3 Arbitration (Optional). [OPTIONAL PROVISION] At either Party’s election, any dispute, claim, or controversy arising under or relating to this Agreement shall be resolved by confidential, binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, conducted in [CITY, MI], before a panel of [ONE/THREE] arbitrator(s). Judgment on the award may be entered in any court of competent jurisdiction. Notwithstanding the foregoing, either Party may seek temporary or permanent injunctive relief, specific performance, or appointment of a receiver in state court without breach of this arbitration agreement.
12.4 Jury Trial Waiver (Optional). [OPTIONAL] EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.
12.5 Survival. The provisions of this Section 12 shall survive any termination of this Agreement.
13. MISCELLANEOUS PROVISIONS
13.1 Notices. All notices required or permitted hereunder shall be in writing and delivered (i) in person, (ii) by nationally recognized overnight courier, or (iii) by electronic mail with confirmation of receipt, to the addresses set forth below (or such other address a Party may designate by notice). Notice is deemed given (a) when actually received, or (b) on the first Business Day after deposit with an overnight courier.
13.2 Amendment; Waiver. This Agreement may be amended or modified only by a written instrument signed by both Parties. No waiver shall be effective unless in writing and signed by the Party against whom enforcement is sought.
13.3 Assignment. Purchaser may not assign or transfer this Agreement without Seller’s prior written consent, except that Purchaser may assign to an Affiliate upon prior written notice to Seller provided Purchaser remains liable. Any prohibited assignment is void.
13.4 Successors and Assigns. This Agreement shall inure to the benefit of and bind the Parties and their respective successors and permitted assigns.
13.5 Severability. If any provision is determined to be invalid or unenforceable, the remainder of the Agreement shall remain in full force, and the invalid provision shall be reformed to reflect the Parties’ intent to the maximum extent permitted by Applicable Law.
13.6 Entire Agreement. This Agreement (including all Exhibits) constitutes the entire agreement between the Parties pertaining to its subject matter and supersedes all prior or contemporaneous agreements, understandings, and representations.
13.7 Counterparts; Electronic Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together constitute one instrument. Signatures delivered electronically (e.g., via PDF or DocuSign) shall be deemed originals for all purposes.
13.8 Further Assurances. Each Party shall execute and deliver such additional documents and take such further actions as may be reasonably necessary or desirable to carry out the provisions of this Agreement.
13.9 Time of Essence. Time is of the essence with respect to all dates and time periods in this Agreement.
14. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
SELLER:
[SELLER LEGAL NAME]
By: _______
Name: _______
Title: ______
Date: ________
PURCHASER:
[PURCHASER LEGAL NAME]
By: _______
Name: _______
Title: ______
Date: ________
[Notary acknowledgment blocks and witness signature lines to be added as required by Michigan law and local recording office practice.]
EXHIBIT LIST
Exhibit A – Legal Description of the Land
Exhibit B – Form of Warranty Deed
Exhibit C – Form of Bill of Sale
Exhibit D – Assignment and Assumption of Contracts
Exhibit E – FIRPTA Affidavit
Exhibit F – Seller’s Closing Certificate
Exhibit G – Closing Statement
Exhibit H – Allocation of Purchase Price (Optional)
[// GUIDANCE:
1. Confirm local recording requirements (e.g., transfer tax references and notarial wording).
2. Verify zoning letter timing with municipality—processing can exceed Due Diligence Period.
3. Michigan requires compliance with the Seller’s Disclosure Act for residential property; not applicable here but ensure asset class remains “commercial.”
4. Review Michigan’s Clean Corporate Citizen and Baseline Environmental Assessment programs if remediation is contemplated.
5. Title Company must be authorized to issue policies in Michigan.]