Non-disclosure agreements in commercial real estate transactions

On Behalf of | May 17, 2022 | Real Estate Law |

No two commercial real estate transactions are the same. From one transaction to the next, the property in question, the seller’s needs and the buyer’s requirements will differ. But in each case, despite the differences, a non-disclosure agreement (NDA) should be used.

Why is an NDA critical?

For both buyers and sellers of commercial property, protecting information is crucial. Each party has interests which need to be guarded while a transaction is pending. Guarding those interests, by way of information, is why an NDA is necessary.

For purchasers, they will be required to disclose financial information as part of the negotiation process. Obviously, this is information they would not want to become public knowledge – an NDA can help ensure it doesn’t. Furthermore, a well-crafted NDA can improve the relationship with the seller, making it more likely the seller will part with information key to the buyer’s due diligence.

For sellers of commercial property, an NDA keeps details of the property and its potential sale from spreading. It allows the seller to control the flow of information only to those who are serious as potential buyers – even if it’s only one buyer.

What should an NDA include?

Since every commercial real estate transaction is unique, so too is every NDA. It should include a description of whatever information is subject to the NDA, as well as any which is specifically excluded. It should also contain time considerations for the NDA to be effective. Beyond these basic concepts though, the NDA should be carefully drafted to suit the needs of the parties and the property involved. To ensure it’s done properly, seek the assistance of an experienced professional who knows Florida commercial real estate law.