A long-term completion date is the date by which a new construction must be completed. If this is not the case, the buyer has the right to withdraw from the contract and get his money back. Or the buyer can proceed with the purchase. Under the terms of the contract, the developer may owe the buyer money for each day the property is not completed after the deadline. The Slovenian government is stepping up measures every day, limiting the work of state institutions and the economy to combat the coronavirus outbreak. Measures such as the suspension of procedural deadlines are also introduced in the administrative field. Government agencies continue to carry out their functions, but due to their limited capacity, they are no longer subject to tacit rejections or bid approvals if they do not meet procedural deadlines. It also affects the functioning of the Slovenian competition authority and other regulatory authorities empowered to grant the necessary approval to conclude mergers and acquisitions. Therefore, it is likely that the period initially agreed between the parties for the success of the transaction will have to be extended. Arrangements may be made to extend the contract beyond the extended termination date if certain conditions are not met.
However, court proceedings have shown that such clauses must be formulated with the utmost care and explicitly. In Cohen v. Tesco Properties Ltd, the sale of the land was subject to the developer obtaining a building permit. The contract provided for an extended shutdown date until January 6, but provided that it could be extended “until June 9” inclusive of the same year. The condition required the buyer to apply to the seller for such an extension and pay an amount of approximately £8,000 for each month of renewal periods. The buyer did not request an extension until January 6 and the seller terminated the contract. The buyer argued that it believed it could make such a request at any time until the final extended shutdown date of June 6, as the contract stated “up to and including June 6”. If the transaction is leveraged, the longstop date must also be taken into account in the financing agreement. Such a shutdown date should not be longer than that provided for in the main transaction agreement.
If it is longer, the financing agreement can be terminated earlier and the loan would no longer be possible, although the main transaction agreement is still binding. Therefore, without the means to finance the transaction, the buyer would be exposed to penalties or liability. In point (a) above, there is no binding contract and the parties are free to withdraw as during the negotiations, unless the conditions are met. To comply with the agreement, proponents must deliver the notice of completion no later than the date of completion of the extended shutdown. If this does not succeed – because the property is not yet ready – the buyer has two options: as the long-term termination date approaches, if the contract allows it and/or if the parties agree, the condition can be lifted and the parties can choose to continue the transaction despite the non-compliance with the condition. In M&A transactions, it is common for the parties to agree on a timeframe within which all the prerequisites for a transaction must be met and the transaction must be completed. If the transaction remains incomplete at the end of this period, the contract is either terminated ipso jure or one of the parties has the right to withdraw. Such a clause is called a “long stop date”. When buying a new build, there are two different types of completion dates: That`s not to say that buying new construction outside the plan is a bad idea. This can be a great opportunity, especially if you have a lot of flexibility.
If not, you should ask yourself if buying a new build is right for you. In particular, we recommend that you read the fine print very carefully to see what the long-term shutdown completion date is. Do you need to specify a long shutdown date for an option to be valid? The Life and Accumulation Act, 2009 (CIP 2009) did not apply the perpetuity rule for options (Perpetuities and Accumulations Act, 2009) to options granted after April 6, 2010, so options granted after April 6, 2010 do not have to specify a long-term stop date. Prior to the 2009 PAA, a call option was invalid if not exercised within 21 years. As a result, the seller retained the deposit paid under the contract (as is customary when the long stop date occurs and the conditions are not met) and the benefit of the building permit, which was finally granted after the first long stop date on February 14 (since the buyer is not the owner of the building permit). Conditional contracts allow the buyer/developer to conclude the contract, but not to pay money for the development, until, for example, the building permit has been granted. It effectively prevents the seller from exchanging the property during the conditional period. Contingency contracts are often used for the sale/purchase of commercial real estate. It allows the parties to agree to the transaction under certain conditions. However, it could be used to represent a date by which certain obligations under an agreement must be fulfilled or certain rights in an agreement must be exercised. The parties should first consider the contractual purpose of the extended shutdown date and the effects of the expiry of the extended shutdown date.
Determine whether the extended stay date applies to a condition precedent that must be met before the agreement enters into force properly, or whether the extended stay date refers to a date on which an obligation must be performed by one of the parties under an already applicable contract.