Sale And Leaseback Contract for the United States

Sale And Leaseback Contract Template for United States

A Sale and Leaseback Contract is a complex financial arrangement governed by U.S. federal and state laws, where an owner sells their property to a buyer and simultaneously enters into a lease agreement to continue using the property as a tenant. This transaction type is regulated by various U.S. statutes including the Internal Revenue Code, UCC, and state property laws, requiring careful consideration of tax implications, accounting standards, and legal requirements in the relevant jurisdiction.

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What is a Sale And Leaseback Contract?

The Sale And Leaseback Contract is utilized when organizations seek to unlock capital from their real estate assets while maintaining operational use of the property. This document type, commonly used in U.S. commercial transactions, combines elements of both a purchase agreement and a lease agreement. It must comply with federal tax regulations, state property laws, and accounting standards (particularly ASC 842). The contract typically includes detailed provisions for the sale transaction, lease terms, maintenance obligations, and potential buyback options, making it essential for businesses seeking to optimize their real estate holdings while maintaining operational continuity.

What sections should be included in a Sale And Leaseback Contract?

1. Parties: Identification of seller-lessee and buyer-lessor, including full legal names and addresses

2. Background: Context of the transaction, property description, and purpose of the sale-leaseback arrangement

3. Definitions: Key terms used throughout the agreement including Property, Closing Date, Lease Term, Base Rent, etc.

4. Sale Terms: Purchase price, payment terms, closing conditions, and transfer of title provisions

5. Lease Terms: Rent amount, duration, payment schedule, and basic obligations of both parties

6. Representations and Warranties: Statements of fact by both parties regarding property condition, authority to enter agreement, and compliance with laws

7. Covenants: Ongoing obligations including maintenance, insurance, taxes, and compliance with laws

8. Default and Remedies: Events of default and corresponding remedies for both sale and lease portions

9. Miscellaneous: Standard provisions including notices, governing law, amendments, and severability

What sections are optional to include in a Sale And Leaseback Contract?

1. Environmental Provisions: Additional terms regarding environmental compliance, investigations, and remediation obligations

2. Financing Provisions: Terms related to third-party financing, including lender rights and requirements

3. Purchase Option: Terms allowing lessee to repurchase property, including price determination and exercise conditions

4. Operating Expense Provisions: Detailed allocation of operating expenses between parties

What schedules should be included in a Sale And Leaseback Contract?

1. Schedule A - Property Description: Detailed legal description of the property including boundaries, improvements, and fixtures

2. Schedule B - Rent Schedule: Detailed payment schedule including base rent amounts, payment dates, and any escalations

3. Schedule C - Operating Expense Allocation: Detailed breakdown of responsibility for operating costs between parties

4. Schedule D - Permitted Use: Specific permitted and prohibited uses of the property during lease term

5. Schedule E - Maintenance Responsibilities: Detailed allocation of maintenance and repair obligations between parties

6. Schedule F - Required Insurance: Specific insurance requirements for both parties including coverage types and amounts

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Free to use

Relevant legal definitions

Clauses

Relevant Industries

Commercial Real Estate
Manufacturing
Healthcare
Retail
Transportation

Relevant Teams

Finance
Legal
Real Estate
Tax
Operations
Treasury

Relevant Roles

Chief Financial Officer
Real Estate Director
Corporate Treasurer
General Counsel
Asset Manager

Industries

Internal Revenue Code Section 1031: Federal tax regulations governing the tax treatment of sale-leaseback transactions, including requirements for tax-deferred exchanges

Uniform Commercial Code (UCC): Articles 2 (Sales) and 9 (Secured Transactions) governing commercial transactions and secured interests in the property

Securities Exchange Act: Federal regulations that may apply if the sale-leaseback transaction involves public companies

Bankruptcy Code: Federal laws providing protection and guidelines in case of insolvency of either party

State Property Laws: State-specific regulations governing real property transactions and ownership rights

State Landlord-Tenant Laws: State-specific regulations governing the relationship between landlords and tenants, including rights and obligations

State Commercial Leasing Regulations: State-specific rules governing commercial lease agreements and their enforcement

State Tax Laws: State-specific tax implications and requirements for sale-leaseback transactions

State Recording Requirements: State-specific rules for recording and registering property transactions and lease agreements

FASB Guidelines: Financial Accounting Standards Board guidelines for proper accounting treatment of sale-leaseback transactions

ASC 842: New lease accounting standards affecting how sale-leaseback transactions are recorded and reported

GAAP: Generally Accepted Accounting Principles governing the accounting treatment and reporting of sale-leaseback transactions

Local Zoning Laws: Municipal regulations governing property use and restrictions

Environmental Regulations: Federal and state environmental protection requirements that may affect the property transaction

Truth in Lending Act: Federal regulations governing financing disclosures if the transaction involves financing components

Anti-fraud Provisions: Federal and state regulations protecting against fraudulent transactions and misrepresentation

Statute of Frauds: State law requiring certain contracts to be in writing to be enforceable

Local Recording Requirements: Municipal-specific requirements for recording real property transactions and leases

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What is a Sale And Leaseback Contract?

What sections should be included in a Sale And Leaseback Contract?

What sections are optional to include in a Sale And Leaseback Contract?

What schedules should be included in a Sale And Leaseback Contract?

Authors

Alex Denne

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