FRELA provides a legal service for reviewing acquisition documentation for businesses and professionals.
Are you planning to purchase a commercial property?
When reviewing the acquisition or sale documentation of a business or company with a significant real estate component in France, it is important to consider several key elements to ensure a smooth and secure transaction.
Here is an exhaustive list of the main elements to consider:
Letter of Intent: The letter of intent is typically the first document prepared in an acquisition. It outlines the key terms and conditions of the proposed transaction, including the purchase price, payment terms, details on assets and liabilities, regulatory conditions, and timelines.
Memorandum of Understanding: The memorandum of understanding is a more detailed document than the letter of intent, stating the terms and conditions of the proposed transaction. It may include provisions regarding warranties, non-compete obligations, and financing conditions.
Acquisition Agreement: The acquisition agreement is a legal document that formalizes the terms and conditions of the transaction. It includes provisions on the transfer of ownership of assets, assumption of liabilities, rights and obligations of the parties, price adjustments, and warranties.
Financial Statements: Financial statements are a key element of any merger or acquisition transaction. They provide detailed financial information about the target company, including the balance sheet, income statement, and cash flow statement.
Due Diligence Report: The due diligence report is a detailed report that describes the findings of the comprehensive examination of the target company. It covers legal, financial, operational, and commercial aspects of the business.
Sales and Purchase Agreements: The sales and purchase agreements state the terms and conditions of the purchase and sale of assets. They include provisions regarding warranties, payment terms, responsibilities, and ownership rights.
Confidentiality Agreements: Confidentiality agreements are legal documents that bind the parties to maintain the confidentiality of information related to the transaction.
Regulatory Approvals: Regulatory approvals are documents required to obtain approval from regulatory authorities for the transaction. They may include permit applications, approvals, and notifications.
Asset Valuations: Asset valuations are reports from independent experts that provide an estimation of the value of the target company’s assets.
Legal Opinions: Legal opinions are documents prepared by lawyers that provide legal advice on the transaction. They include legal analyses on tax, regulatory, and contractual aspects of the transaction.
Title Deed: This document attests to the ownership of the property. It should be verified to ensure that the seller is the legal owner of the property without ongoing disputes or mortgages.
Preliminary Sales Agreement: This is a contract signed by the buyer and the seller, which sets out the terms of the transaction. It should be carefully reviewed to ensure that all conditions of sale are included and that the terms of the transaction comply with the law.
Notarized Deeds: The notary is responsible for drafting and signing the deeds of sale. It is important to verify that all notarized deeds are in order, signed by the parties involved, and comply with the law.
Taxes and Duties: When acquiring a business, there are several taxes and duties to consider, such as transfer duties, property taxes, habitation taxes, etc. It is important to verify that all taxes and duties have been paid and that the property is in compliance with tax authorities.
Technical Surveys: It is important to ensure that all mandatory technical surveys have been conducted and that the business complies with current safety standards.
Easements: There may be easements that affect the business, such as rights of way or usage restrictions. It is important to check if these easements may impact your use of the property.
Urban Planning Certificate: It is important to verify if the business is located in an urbanized area and if it is possible to obtain the necessary building permits.
Existing Mortgages: It is important to check if the business is encumbered by a mortgage or any other charges that could limit ownership.
Termination Clauses: It is important to review the termination clauses of the sales contract, which may include penalties for payment delays or other conditions.
Suspensive Conditions: It is important to verify if the sales contract includes suspensive conditions, such as obtaining financing or building permits, which must be fulfilled before the sale is finalized.
Guarantees and Insurance: It is important to verify the guarantees and insurance related to the sale, such as the ten-year warranty for construction work carried out on the property.
Seller’s Obligations: It is important to verify the seller’s obligations regarding key handover, release of the property, and additional warranties.
FRELA lists, verifies, secures, optimizes, and certifies your acquisition documents for acquisitions or sales of businesses or companies with a significant real estate component.
- Copy of identification documents
- Copy of the family booklet
- Copy of the last two tax notices
- Copy of the last three payslips for each buyer
- Simulation or financing plan proposed by a banking institution
- Proof of personal contribution
- The offer to purchase
- The acquisition agreement
- Your offer to purchase
Compliance verification of mandatory elements
Energy Performance Certificate (except for off-plan sales)
The Energy Performance Certificate (EPC) is a document primarily used to estimate the energy consumption and greenhouse gas emissions of a property. It applies only to mainland France: the part of France located in Europe (96 departments). It must be included in the technical diagnostic file (DDT) and provided to the buyer or tenant in case of sale or rental of the property. Sanctions are provided, especially if the EPC does not comply with regulations.
Lead Risk Assessment (Crep)
The Lead Risk Assessment (Crep), also known as the lead diagnostic, is a document that provides information about the presence of lead in dwellings. Your property is subject to this assessment if it was built before 1949. The Crep must be included in the technical diagnostic file (DDT). The DDT must be provided to the buyer or tenant in case of sale or rental of a property. Sanctions are provided, especially if the Crep does not comply with regulations.
Asbestos Survey or “Asbestos Diagnostic”
The asbestos survey, also known as the asbestos diagnostic, is a document that indicates the presence or absence of materials or products containing asbestos in a property. Your property is subject to this survey if its construction permit was issued before July 1997. The asbestos survey must be included in the technical diagnostic file (DDT). The DDT must be provided to the buyer in case of property sale.
Electrical Installation Condition
The electrical installation condition, also known as the electrical diagnostic, is an assessment that provides an overview of the safety of electrical installations in properties. Your property is subject to this assessment if the electrical installation is over 15 years old. The assessment must be included in the technical diagnostic file (DDT). The DDT must be provided to the buyer or tenant in case of sale or rental of a property.
Gas Installation Condition
The gas installation condition, also known as the gas diagnostic, is an assessment that provides an overview of the safety of gas installations in properties. Your property is subject to this assessment if the gas installation is over 15 years old. The assessment must be included in the technical diagnostic file (DDT). The DDT must be provided to the buyer or tenant in case of sale or rental of a property.
Non-Collective Sewage System Condition
When a property is not connected to the public wastewater collection system, it must have an autonomous non-collective sewage system. This system must undergo an inspection conducted by the municipality, which results in a diagnostic report. In case of sale, the seller must attach this report to the technical diagnostic file (DDT). The DDT must be provided to the buyer.
Termite and Other Wood-Destroying Insects Survey
The termite survey, also known as the termite diagnostic, provides information on the presence or absence of wood-destroying insects (particularly termites) in a property. This document must be conducted when the property is located in an area declared by a prefectural decree. It must be provided to the prospective buyer.
Risks and Pollution State Report
A “risks and pollution state” report must be included with the promise of sale, deed of sale, or lease in the relevant municipalities.
Airport Noise Survey
The Noise Survey (or State of Airport Noise Nuisances) is a mandatory document for any sale or rental of a property located in an area classified as being exposed to airport noise. This document informs the prospective buyer or tenant about the existence of aircraft noise nuisances.
The rules differ depending on whether you are a seller or a landlord.
Contact us and present your project for the acquisition or divestment of real estate or businesses.