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UK property SPV share acquisitions: legal risk allocation, due diligence, heads of terms, NAV/completion accounts pricing, and practical completion mechanics compared with direct property purchases
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UK property SPV share acquisitions: legal risk allocation, due diligence, heads of terms, NAV/completion accounts pricing, and practical completion mechanics compared with direct property purchases
Key differences in the legal risk profile, compared to a direct property purchase In general, a person acquiring the shares in an SPV that owns UK property seeks to emulate the commercial position that would exist on a direct purchase of that property. Typically, property-related points are handled through replies to enquiries and the buyer’s own investigations, with any other issues dealt with separately via due diligence and the corporate documentation. Nevertheless, the risk profile of an SPV transaction is, unavoidably, quite different from that of buying the property directly. Two principal reasons explain this: on a direct purchase, the buyer can rely directly on property searches and the process of land registration to secure good title to the property, free of encumbrances. In an SPV share acquisition, those searches provide only indirect protection the purchaser of SPV shares will inherit, albeit
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