To “assign” or “not assign”: Let commercial buyers ponder their options!

Buyers of commercial properties need flexibility when making their commercial/business real property purchases. When preparing the initial offer, it is important that the commercial realtor name the buyer as  “XXXX, a Florida Corporation and or assigns”. This allows the buyer of the property to consider the following issues before closing:

• How should they take title? As an individual, LLC or a Corp?
• Should they take title with a current entity or newly formed entity?
• If the property is being financed, will the lender provide a new loan to a newly formed entity or require the buyer to take title personally or with an established entity?
• Will the new entity be able to obtain property and hazard insurance for the newly formed entity?
• What will be the tax consequences of a new versus old entity taking title?
• Does their current entity have any liens or judgments that could adversely impact the property purchased

The buyer should consult with their CPA and legal counsel regarding the implications of how they take title, but by placing “and or assigns” on the buyer name line, this allows them the flexibility to consider all their options.

Foreign Nationals and U.S. Citizens considerations

For both residential and investment properties, many buyers who are foreign nationals or U.S. citizens with concerns over asset protection,  will also need to  consider whether to take title as a company/corporate entity and also require this flexibility in how the buyer name is written.

Also, we see that in many contracts, the assignment check box is left blank. This creates difficulties for the buyer when trying to make changes after the contract is signed. Sellers can be inflexible about name changes for a variety of reasons, but tend to be generally open to the “and or assigns” language at the initial stage of an offer.

Don’t lock your buyer into a set name. When in doubt, the “and or assigns” language will set  them (and you ) free. A contract is designed to be the clear and concise road map to a transaction and clarifying these crucial items can ensure a smooth and successful closing. 

Here is a sample of what a buyer name should look like for a commercial contract or anyone that may want to take title as another entity:

Here is that often-missed little check box that can allow the buyer the flexibility they need to ponder their options:

 Please contact us at 305-271-0100 x701 or info@theclosingcompany.net for any information on your commercial closing.