Once you’ve accepted an offer and completed on the LOI process with Ocean Block Capital for the sale of your net-lease property, several bureaucratic tasks need to be closed before we’re able to finalize the deal and completed on the transaction.
What do these steps generally consist of:
Typically these stages involve the agreement, due diligence process, and deal completion formalities. Once the agreement process begins, the management of the deal shifts from our associates to our asset manager Michael Kyriak, who then champions the efforts with you, your attorney, the tenant, and all other necessary parties.
The immediate next steps include working on all title documents in conjunction with a title company—to ensure that the seller satisfies all requirements and legal claims to sell the property. We have our attorneys working with yours on this process, to ensure all documents are in place to facilitate the title transfer.
How long do these steps generally take:
The amount of time on this process varies from a few days to a couple of months, depending on the situation on the seller's side, access to the documents required, and the time taken by the respective bureaucratic authorities in the provisioning of the documents.
What are the specific documents needed for the acquisition:
The documents and steps encountered in the process are:
- Estoppel: This is a document from the tenant stating/acknowledging that they are in possession of the property as tenants, and acknowledging they’re aligned with lease terms, the rent is being paid, and there are no issues with the property that the landlord would be aware of.
- Insurance Certificates: There would include ensuring that the property and liability certificates are in place. Some of these are carried either by the tenant or us, depending on the property and deal type.
- As part of the diligence process, there are 5 major diligence documents—the survey, zoning report, Phase 1, Property Condition, and Title report. Here we may work with a few third-party companies that let us obtain these reports, and are a standard requirement for us and our diligence.
- The survey is the legal, technical, and dimensional description of the property
- The zoning report describes what the piece of land is zoned for, and make sure the property complies with that
- The Phase 1 report is an environmental report, which would describe any studies conducted on the property. Generally, they will be clean but are essential in circumstances when, for example, there’s a history of a gas tank, leaks, contamination, etc. or any relevant environmental issue and if there’s something that we as the sellers might need to accommodate for, or be mindful of when we take ownership of the property.
- The property condition report is is an in-person inspection of the general condition of the property and its elements. This is especially key for those deals where the repairs and maintenance liability is assigned to us as the owners and helps us assess any potential challenges and take appropriate measures—especially where the “Roof and Structure” liability falls on the landlord.
- The title report ensures that there’s no other claim to the property, that gives us as the buyers and future owners title insurance.
What is the seller’s role in this process?
As a seller, your active role tends to be minimal during these stages. We continue to work with your attorneys and the all other parties at this time. However, it is vital that you monitor these processes, as your occasional involvement might be necessary in the smooth transfer of documents—from yourself to us, or from the tenant to us.
Most often, some documents are required to be sourced from the tenants and would require seller involvement to allow for the sharing of those documents. We’d usually be willing to take that over from you, but sometimes it involves permission and clearance and tends to be faster when the seller and tenant work together and source those documents for us.
It’s essential that all documents that are required from you be compiled beforehand, so as not to scramble for them during these stages of the deal, potentially impacting the timeline in closing on the transaction.
We advise sellers to be organized and ready with all their documents, and establish and maintain a good tenant contact as they’re going to be involved with some part of the paperwork and their cooperation is helpful to facilitate the deal process. Tenants can sometimes be unresponsive, and the experience can be very bureaucratic, which slows the closing process.
Otherwise, The Ocean Block Capital team aspires to be aggressive in pursuing all the moving parts to the deal, with the goal of a seamless transaction and an on-time payout for the seller.