Breaking Up is Hard To Do: Inside the Fate of 251 Park Ave. South
By Joshua Stein June 26, 2013 11:13 am
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Most commercial real property changes hands through a process that involves brokers and exhaustive legal negotiations, typically followed by a voluminous purchase-and-sale contract that devotes a few pages to 99 percent of the transaction: the seller’s obligation to convey the real estate. In the rest of the contract, the seller tells the buyer various facts about the property. Then the contract deals at length with what happens if those assurances are wrong. Many more pages devote themselves to hypothetical eventualities, such as condemnation, unexpected title problems, tenants in default and so on. The idea is to give the buyer certainty about what it is getting and deal with every possible eventuality, at significant cost in time, legal fees and uncertainty during negotiations.
In a typical court-ordered auction sale, however, the contract is simple and says very little more than this: the highest bidder will pay a certain amount for the property and will close within a short time. In a bankruptcy court sale, the process often starts with a negotiation and a somewhat typical purchase-and-sale contract, followed by an open bidding process, often with a breakup fee if another purchaser outbids the original contract purchaser. But 251 Park Avenue South is not a bankruptcy sale.
Without any of the familiar language from purchase-and-sale contracts, will bidders at the auction of 251 Park Avenue South bid as much as if they were buying the property under a standard purchase-and-sale contract? I am trying to make sure the answer is yes.
The key to doing that consists of giving potential buyers as much information and comfort as possible about the property—as close as possible, I hope, to what they would obtain if they bought through a negotiated bidding process and an ordinary purchase-and-sale contract.
So I’ve collected all the information that any seller would typically provide and made it available on a secure website. I am requiring purchasers to sign confidentiality agreements, not only because the parties care about confidentiality, but also so I know who is looking at the property and to prevent unexpected claims. And I am offering tours so bidders can see the merchandise.
Ask me on August 29 whether I think I achieved my goal. In the meantime, to find out more about the upcoming public auction and 251 Park Avenue South, visit the website I created, www.251pas.com.
Joshua Stein is the sole principal of Joshua Stein PLLC. The views expressed here are his own. He can be reached at joshua@joshuastein.com.
