Property Ownership Agreement: Definition & Sample

A property ownership agreement, or property co-ownership agreement, is a legal document used between parties that want to jointly purchase a property. The agreement determines how a property will be used, what happens to it if one of the owners dies or wants to leave, and whether there are any restrictions on who can buy it.

Property ownership agreements can be used for residential or commercial properties. For businesses, it lets you protect your interests in your business assets while allowing you to split the financial obligations of purchasing a property. A well-drafted agreement can help maintain good relationships among partners by outlining each person's rights and responsibilities within the partnership.

The agreements typically provide for unanimous consent of all parties before major decisions are made about the property. A real estate lawyer may draft an agreement that defines issues such as termination provisions, voting procedures, changes in capital contributions, and covenants not to compete or assign without consent from other party.

Common Sections in Property Ownership Agreements

Below is a list of common sections included in Property Ownership Agreements. These sections are linked to the below sample agreement for you to explore.

Property Ownership Agreement Sample

REAL ESTATE PURCHASE AGREEMENT

AND ESCROW INSTRUCTIONS

HESPERIA – MAIN STREET, LLC,

a California limited liability company,

TNP ACQUISITIONS, LLC,

a Delaware limited liability company,

REAL ESTATE PURCHASE AGREEMENT

and ESCROW INSTRUCTIONS

THIS REAL ESTATE PURCHASE AGREEMENT and ESCROW INSTRUCTIONS (this “Agreement”) is entered into as of this 29th day of April, 2011 (the “Effective Date”), by and between HESPERIA – MAIN STREET, LLC, a California limited liability company (“Seller”); TNP ACQUISITIONS, LLC, a Delaware limited liability company (“Buyer”); and Lawyers Title Company (“Escrow Agent”).

WHEREAS, Seller owns real property and improvements commonly known as the “Topaz Marketplace,” located at 14101, 14135, and 14177 Main Street, Hesperia, California 92345, and improved with an approximate 53,259 square foot retail shopping complex, altogether as more particularly described on Exhibit “A” (the “Property”); and

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Property on the terms and conditions contained in this Agreement;

NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

SALE OF PROPERTY

1.1 Property To Be Sold . Subject to the terms and provisions hereof, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, upon the terms and conditions of this Agreement:

1.1.1 All of the land described and/or shown on Exhibit “A” attached hereto, together with all privileges, rights, easements and appurtenances belonging to such land, including without limitation, all right, title and interest (if any) of Seller in and to any streets, alleys, passages, and other rights-of-way or appurtenances included in, adjacent to or used in connection with such land and all right, title and interest (if any) of Seller in all mineral and development rights appurtenant to such land (collectively, the “Land”);

1.1.2 All buildings, structures and other improvements and all of Seller’s right, title and interest, if any, in all fixtures, systems and facilities located on the Land (the “Improvements”);

1.1.3 All of Seller’s rights in the leases of the Land and Improvements listed on Exhibit “B” hereto (collectively, as same may be amended, the “Leases,” and each a “Lease,” and each tenant under a Lease, a “Tenant”), and including Seller’s rights to any Tenant deposit held by Seller (collectively, the “Tenant Deposits”) pursuant to the Leases; and

1.1.4 All of Seller’s right, title and interest, if any, in all intangible assets of any nature relating to the Land or the Improvements, including, without limitation, all of Seller’s right, title, and interest in all (i) warranties and guaranties relating to the Improvements in the possession or control of Seller, (ii) all use, occupancy, building and operating licenses, permits, approvals, and development rights and (iii) all plans and specifications related to the Land and Improvements, in each case to the extent that Seller may legally transfer the same (the “Intangible Property”).

1.1.5 The Land and Improvements are hereinafter sometimes referred to collectively as the “Real Property,” and the Real Property, Leases, Tenant Deposits and Intangible Property are hereinafter sometimes referred to collectively as the “Property.”

1.2 Purchase and Sale . Buyer agrees to purchase from Seller, and Seller agrees to sell to Buyer, all of Seller’s right, title and interest in and to the Property, on the terms and conditions set forth in this Agreement.

1.3 Purchase Price . The purchase price for the Property (the “Purchase Price”) shall be Thirteen Million Five Hundred Thousand Dollars ($13,500,000.00). The Purchase Price shall be paid to Seller by Buyer on the Closing Date (as defined in Section 1.5.1 below), plus or minus all adjustments or credits as set forth herein, by wire transfer of immediately available federal funds.

1.4 Deposit And Escrow .

1.4.1 Within one (1) Business Day after the Effective Date, Buyer shall deliver to Escrow Agent at the following address: 2398 East Camelback Road, Suite 650, Phoenix, AZ 85016, Attention: Ms. Irma Hickman, a good faith deposit in the amount of One Hundred Twenty-Five Thousand Dollars ($125,000.00) (said amount, inclusive of interest earned thereon, is referred to herein as the “Deposit”). The Deposit shall be held in an insured, interest-bearing account with interest accruing for the benefit of Buyer. Buyer’s Federal Tax Identification Number may be listed after its signature. The Escrow Agent shall not be responsible for any loss, diminution in value or failure to achieve a greater profit as a result of such investments. Escrow Agent assumes no responsibility for, nor shall said Escrow Agent be held liable for, any loss occurring which arises from (i) failure of the depository institution, (ii) the fact that some banking instruments, including without limitation repurchase agreements and letters of credit are not covered by the Federal Deposit Insurance Corporation, or (iii) the fact that the amount of the Deposit may cause the aggregate amount of any depositor’s accounts to exceed $250,000 and that such excess amount is not insured by the Federal Deposit Insurance Corporation. The Escrow Agent is not a trustee for any party for any purpose, and is merely acting as a depository and in a ministerial capacity hereunder with the limited duties herein prescribed. The Escrow Agent may conclusively rely upon and act in accordance with any certificate, instructions, notice, letter, e-mail, facsimile, other written instrument believed to be genuine and to have been signed or communicated by the proper party or parties. The Seller and Buyer shall indemnify, save, defend, keep and hold harmless the Escrow Agent from any and all loss, damage, cost, charge, liability, cost of litigation, or other expense, including without limitation attorney’s fees and court costs, arising out of its obligations and duties, including but not limited to (i) disputes arising or concerning amounts of money to be paid, (ii) funds available for such payments, (iii)

persons to whom payments should be made or (iv) any delay in the electronic wire transfer of funds, as Escrow Agent, unless Escrow Agent’s actions constitute gross negligence or willful misconduct.

1.4.2 The Deposit shall be applied to the Purchase Price if the Closing (as defined in Section 1.5.1 below) occurs. After the expiration of the Due Diligence Period, the Deposit shall be nonrefundable to Buyer unless a Closing fails to occur due to Seller’s breach or default under this Agreement, a failure of a representation or warranty by Seller to be true and correct in all material respects as of the Closing or due to the failure of a condition precedent set forth in Section 5.4, or as otherwise provided for in this Agreement, and shall constitute liquidated damages to Seller if escrow fails to close as a result of Buyer’s default as provided in Section 6.1 below. In the event Buyer shall elect to terminate this Agreement during the Due Diligence Period, the Deposit shall be returned to Buyer as provided in Section 3.6 below.

1.5 Closing Date .

1.5.1 The closing (“Closing”) shall take place through an escrow opened with Escrow Agent on the day which is Thirty (30) days after the expiration of the Due Diligence Period (the “Closing Date”).

TITLE AND SURVEY

2.1 Title and Survey . No later than three (3) Business Days after the Effective Date, Buyer shall, at Buyer’s cost and expense, obtain a preliminary title report or commitment (the “Preliminary Report”) from Lawyers Title Company (the “Title Company”), together with legible copies of all recorded encumbrances and exceptions to title; Seller shall provide to Buyer a copy of any existing survey or plat of the Property that is in the Seller’s possession or control. Buyer shall, at its option and at its expense, (i) conduct UCC searches covering Seller and the Property (the “UCC Searches”) and (ii) order an “as built” survey of the Real Property by a licensed surveyor or registered professional engineer (the “Survey”).

2.2 Review of the Preliminary Report, Survey and UCC Searches; Objection; Approval or Termination . On or before the last day of the Due Diligence Period, with respect to the Preliminary Report or Survey or UCC Searches or within three (3) Business Days after delivery of any supplement to the Preliminary Title Report (“Supplemental Report”), Buyer shall deliver to Seller a notice (the “Title Objection Notice”) setting forth (i) any matters shown on the Preliminary Report, Supplemental Report, Survey or UCC Searches to which Buyer objects and requires be eliminated, (ii) any modifications, supplements or other modifications of any the legal description, description of exceptions or other matters set forth in the Preliminary Report, Supplemental Report or Survey, and (iii) any endorsements or other affirmative title insurance coverage required to be included in the Title Policy (the “Required Title Condition”). Buyer may make its determination of the Required Title Condition in its sole discretion. Buyer’s failure to give the Title Objection Notice shall be deemed to constitute Buyer’s approval of all matters disclosed in the Preliminary Report, Supplemental Report, Survey and UCC Searches. If Buyer delivers the Title Objection Notice, Seller shall have five (5) Business Days from the receipt of Buyer’s notice to provide Buyer with written notice of Seller’s election to remove or

otherwise cure to Buyer’s satisfaction any objections prior to or at the Closing (“Seller Response Notice”); provided however, Seller shall be obligated to eliminate monetary liens, and any exceptions created or consented to by Seller after the Effective Date, unless approved in writing by Buyer, which Seller shall cause to be released at Closing. If Seller delivers or is deemed to have delivered notice of election not to cure a disapproved item, then Buyer may either (i) elect to terminate this Agreement, or (ii) waive in writing its prior disapproval of such item and accept title subject to such previously disapproved item by delivering notice of Buyer’s election to Seller within five (5) Business Days after the deadline for Seller to have sent its Seller Response Notice. If Seller fails to timely deliver the Seller Response Notice within such five (5) Business Day period, then Seller shall be deemed to have elected not to cure the disapproved matters set forth in Buyer’s Title Objection Notice. If Buyer fails to deliver its notice of election to terminate this Agreement or waive its prior disapproval as provide in clauses (i) and (ii) above within such five (5) Business Day period, Buyer shall be deemed to have waived its disapproval. If this Agreement is terminated pursuant to this Section 2.2, the provisions of Section 3.6 shall apply.

2.3 Required Title Condition . Title to the Property shall be conveyed to Buyer subject only to the following matters: (a) current, non-delinquent real estate taxes and assessments, (B) the matters set forth in the Preliminary Report and any Supplemental Report and permitted as part of the Required Title Condition, (c) the Lease and (d) any other matters approved in writing by Buyer or deemed approved by Buyer under the provisions of Section 2.2 above.

INSPECTION AND DUE DILIGENCE PERIOD

3.1 Access . From and after the Effective Date through the Closing, Buyer, personally or through its authorized agent or representatives (including without limitation any prospective lender to Buyer, or such prospective lender’s agents or representatives), shall be entitled, upon no less than two (2) Business Days advance written notice to Seller, to enter upon the Property during normal business hours and shall have the right to make such non-invasive investigations, including appraisals, , engineering studies, soil tests, environmental studies and underwriting analyses, as Buyer deems necessary or advisable. Buyer shall have the right to conduct a Phase I environmental site assessment and, with Seller’s prior written consent (to be given or withheld in Seller’s sole and absolute discretion) a Phase II environmental site assessment (including soils borings, soil sampling and, if relevant, ground water testing, and invasive sampling of building materials with respect to the Property). Buyer’s activities at the Property shall be conducted in such a manner so as not to unreasonably interfere with the occupancy of Tenants or their employees, licensees or invitees. Buyer shall have the right to conduct Tenant interviews with Seller’s prior consent, not to be unreasonably withheld, but with Buyer to be accompanied by a Seller representative if required by Seller. Notwithstanding anything to the contrary contained in this Agreement, Seller shall provide, at Seller’s sole expense, a natural hazard zone disclosure prepared by a provider reasonably acceptable to Buyer. Buyer shall promptly pay when due any third party costs associated with the foregoing. Buyer further agrees to keep the Property free from all mechanics lien claims associated with the foregoing. Buyer shall, at Buyer’s sole cost, repair any damage to the Property resulting from the inspections, and, to the extent Buyer or Buyer’s contractors alter, modify, disturb or change the condition of the Property as part of the

inspections or otherwise, Buyer shall, at Buyer’s sole cost, restore the Property to the condition in which the same were found before such alteration, modification, disturbance or change. Buyer hereby agrees to indemnify and hold Seller (and Seller’s agents, advisors, partners, members, managers, owners, officers and directors, as the case may be) harmless from any physical damages arising out of all inspections and investigations by Buyer or its agents or independent contractors. Notwithstanding any other provision in this Agreement to the contrary, this indemnification shall survive the termination of or Closing under this Agreement.

Prior to entry upon the Real Property and before conducting any activity on the Real Property, Buyer or Buyer’s contractor shall provide Seller with an insurance certificate evidencing that Buyer and/or Buyer’s contractor is maintaining the following insurance:

A. Commercial general liability insurance including, but not limited to, coverage for products/completed operations, premises/operations, contractual and personal/advertising injury liabilities with combined single limits of not less than $2,000,000.00 per occurrence for bodily injury and property damage, containing an endorsement insuring against damage to the Property and to or from underground utilities, naming Seller as a named insured.

B. Any contractor hired to perform environmental tests to the Property shall maintain errors and omissions or professional liability insurance covering injury or damage arising out of the rendering or failing to render professional services with limits of at least $2,000,000.00 per claim.

All insurance maintained under this Section 3.1 shall be procured from insurance companies reasonably satisfactory to Seller and rated “A-VII” or better by the current edition of Bests Insurance Reports published by the A.M. Best Company.

3.2 Due Diligence Period . Buyer shall, subject to the limitations and conditions set forth in Section 3.1 above, have until Twenty-One (21) calendar days following the Effective Date (the “Due Diligence Period”) to physically inspect the Property, review the economic data, underwrite the Tenants and review the Leases, conduct appraisals, perform examinations of the physical condition of the Improvements, examine the Property for the presence of Hazardous Materials (as defined below), and to otherwise conduct such due diligence review of the Property and all of the items to be furnished by Seller to Buyer pursuant to Section 3.3 below, and all records and other materials related thereto as Buyer deems appropriate. Unless Buyer terminates or is deemed to have terminated this Agreement on or prior to the expiration of the Due Diligence Period, as provided in Section 3.5, below, then Buyer shall, within One (1) Business Day following the end of the Due Diligence period, deliver to Escrow Agent an additional deposit of One Hundred Twenty-Five Thousand Dollars ($125,000) (the “Additional Deposit”) with Escrow Agent, and in such event, the Additional Deposit shall be deemed a part of the Deposit for all purposes of this Agreement.

3.3 Items to be Provided by Seller . Prior to the Effective Date, Seller shall have delivered to Buyer accurate and complete copies of all of the information set forth on Exhibit “C” attached hereto and incorporated herein (“Property Information”). In addition to the foregoing deliveries, Seller shall make available to Buyer, at Seller’s address set forth in Section

9.7 below, for inspection and copying the originals of any of the Property Information and any and all other documents, instruments, studies, reports, maps, files, correspondence (including without limitation, Tenant correspondence files), reports and other materials related to the Property and not included in the Property Information.

3.4 Property Contracts . Buyer shall not be required to assume any service or other contracts of Seller at Closing, and any and all Property contracts of Seller (if any) shall, unless otherwise requested by Buyer, be terminated by Seller, at Seller’s expense, as of the Closing Date.

3.5 Buyer’s Possible Early Termination . Buyer shall have the right to approve or disapprove, in Buyer’s sole and absolute discretion, the Property, the Property Information, the Preliminary Report, any Supplemental Report, the Survey, the UCC Searches or any other matter whatsoever regarding the Property. On or before the last day of the Due Diligence Period, Buyer shall provide written notice (“Approval Notice”) to Seller and Escrow Agent that Buyer has approved the Property. Buyer’s failure to provide an Approval Notice upon the expiration of the Due Diligence Period shall be deemed disapproval of the Property. At any time prior to the expiration of the Due Diligence Period, Buyer may provide written notice to Seller and Escrow Agent disapproving the Property (“Disapproval Notice”). Upon the giving of a Disapproval Notice or the deemed disapproval of the Property, this Agreement shall automatically terminate and the provisions of Section 3.6 shall apply .

3.6 Consequences of Buyer’s Early Termination . Upon the giving of a Disapproval Notice or upon deemed disapproval pursuant to Section 3.5, this Agreement shall immediately terminate, and the parties shall be released from all further obligations under this Agreement (except with respect to any provisions that by their terms survive a termination of this Agreement); provided, however, that if Seller is in default hereunder at the time of such termination, Section 6.2 shall additionally apply. Escrow Agent shall pay the entire Deposit to Buyer not later than one (1) Business Day following receipt of Buyer’s Disapproval Notice (as long as the then-current investment of the Deposit can be liquidated in one (1) Business Day). No notice to Escrow Agent from Seller shall be required for the release of the Deposit to Buyer by Escrow Agent under this Section, and the Deposit shall be released and delivered to Buyer upon Escrow Agent’s receipt of Buyer’s Disapproval Notice despite any objection or potential objection by Seller.

REPRESENTATIONS , WARRANTIES AND COVENANTS