A risky move that could jeopardize your transaction.
Putting a deal together: Once a lease or purchase agreement is in place it’s very common to have a series of conditions, homework and due diligence tasks that need to be completed in order to move the deal to closing.For this work, it’s regular practice to hire a group of trained and certified professionals to conduct inspections, review documents and prepare reports and deliver them to the other party.
The challenge however, is getting these people to understand and adhere to the critical timelines agreed to by the buyer and seller or tenant and landlord. It’s very important for all parties to transactions to remember that they are ultimately responsible for the performance of their team.Bankers, inspectors, lawyers, environmental engineers, mortgage brokers, accountants, insurance brokers and the like all need to be advised of the established timelines written in your agreement. They must get a copy of the Condition Schedule when you hire them.
It’s imperative that they are available to work on your project in a timely manner and you should ask them to commit to the deadlines in your agreement so that you do not become culpable for default. Default can render your contract null and void and can also put you in a position of financial or legal liability. Don’t let this happen.
Asking for extensions from the other party, or having to inform them that your due diligence isn’t complete on schedule because one of your contractors is tardy is a risky move that could jeopardize your transaction. It reduces the likelihood of the deal closing and often makes the other party second guess whether working with you is the right decision or a waste of time. Unless agreed to within the body of your agreement, nobody is obligated to grant you an extension. Failure to meet deadlines can open the opportunity of terminating the agreement.
Perhaps, the other party may think, that different opportunities with more credible interlocutors are better pursued. Keep in mind that hired service providers are likely to be working on multiple projects with multiple clients rendering your order on their priority list low. Try to form a relationship with those who provide prompt and timely service and if they are dragging their tail, cutting it too close to the condition dates, re-evaluate. They aren’t helping you and may actually be putting you in jeopardy.
Ultimately you are the one responsible and culpable for any consequences that arise. Be aware of what those consequences are and make sure to push your service providers to get their work done within the time required.Don’t be afraid to light a fire under their butts. It’s in your best interest.
Until next time.
– Mitch Gauzas