Sales process
The most common deal breakers in a property sale
From the missing lease amendment to unsecured buyer financing: issues that can trigger additional review, a price adjustment or an abort – and how to pre-empt them.
"Deal breaker" is too strong a term for most of the issues that stall transactions. Hardly any single point inevitably ends a deal. Each of the following can, however, lead to additional review requirements, a price adjustment or an abort of the transaction.
Sorted by process phase, because when an issue surfaces determines its effect: what is known before the indicative offer is negotiable. What surfaces in due diligence costs trust.
Note: the following provides a general overview of possible transaction structures and related questions. It does not constitute legal or tax advice. The specific legal and tax consequences should be reviewed for each transaction by the relevant professional advisers.
Before the indicative offer
In this phase disruptions arise almost exclusively from information gaps and from expectations that do not match.
Common examples: a price expectation without a derivation, changing statements on occupancy, a lack of clarity on the transaction structure, or a seller whose internal decision position is unresolved. Each of these reduces the number of parties willing to take on the effort of a review.
- Price expectation without a traceable basis
- Inconsistent figures across teaser, memorandum and data room
- Unclear responsibility or consent requirements on the seller side
In due diligence: data and leases
Most discussions arise from contradictions rather than defects. Diverging area figures between lease, area calculation and rent roll, missing amendments, unclear service charge recoveries, or cash flows that cannot be reconstructed from the contracts.
At lease level the most common points concern short remaining terms, tenant concentration, and special termination rights and break options. The legal assessment of such clauses rests with the legal advisers; commercially they act through the assumed security of the cash flow.
In due diligence: technical and ESG
Technical issues bite above all when they are not quantified. A known maintenance backlog with a robust cost estimate is part of pricing. The same backlog without figures leads to safety margins that regularly exceed the actual cost.
Add to that energy performance and foreseeable adaptation requirements. Institutional buyers with their own sustainability targets now review whether an asset fits their target pathways.
Financing and investment committee
On the buyer side, missing or unsecured financing and an unprepared committee process are the most frequent causes of delay. An offer submitted without consulting the financing bank often does not hold up under review.
Checking the financing status therefore belongs to qualification – not to the negotiation phase. A committee date weeks after exclusivity expires is a timetable problem that should be known in advance.
Shortly before signing and closing
In the final phase, disruptions usually stem from open conditions precedent, required third-party consents, renegotiation of warranties and retentions, or from items that reached the data room late.
Late submissions are the underestimated point: a document appearing after the review is complete almost always triggers another round – regardless of its content. The contractual treatment of warranties, retentions and conditions precedent is handled by the legal advisers involved.
In short
It is not the defect that stalls transactions but the moment it surfaces. Known, quantified and documented issues are negotiable – late surprises rarely are.
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Legal and tax notice
The information on this website is provided for general information on real estate, financing and corporate transactions only. It does not constitute legal, tax or other individual professional advice and cannot replace case-specific advice from suitably qualified lawyers, tax advisers or other professionals.
The legal and tax consequences of a transaction depend in particular on its specific structure, the parties involved, existing contracts and the applicable legal and tax framework. Such questions should therefore be reviewed individually by the relevant professional advisers before any decision is taken.
Within the content presented on this website, Fox Capital does not provide legal or tax advice.