I think it was Posh Spice who once said, “The best laid plans of mice and men often go awry.” Sure enough, we ran into the proverbial wrench in the plan during a mock real estate transaction meeting last week. Due to a (thankfully fictional) emergency, an amendment to our carefully negotiated contract was suddenly necessary. Luckily for us, there is protocol for these types of situations. We sat down once again at the negotiating table; when the dust settled, the buyer’s team had more time, and the seller’s team had more money.
As you can tell, our deal is moving right along! To refresh the reader’s memory, Lauren and I serve as counsel for the buyer, David Beckham (aka Eric Reissi). Hannah and Luis serve as counsel for the seller, Scary Spice (aka Alex Barshel). At stake for the buyer is the last piece of property needed for the construction of a MLS stadium; at stake for the seller is a pile of cold, hard cash. Since our first negotiation for the letter of intent (which Eric so eloquently explained) we have actually had several meetings and cut numerous deals.
At one meeting, we were schooled in the ways of contract preparation and negotiation by Adam Lustig and Phil Sosnow. We learned that a typical practice in a contract negotiation is for one side to present the other with a draft of a contract. The receiving party then completes a “redline” (an edit that tracks changes), and the document is finalized at the negotiating table. We participated in our own contract negotiation, which primarily concerned representations, warranties, and damages. We reached an agreement after some give-and-take, and Lauren drafted the finalized contract reflecting the negotiated terms.
At another meeting, we were introduced to the world of joint ventures by Marshall Pasternack and David Resnick. They gave us an overview of entity formation, and explained the drafting and negotiating process for articles of organization and operating agreements. The buyer’s team then had to negotiate and enter into a joint venture agreement with the seller’s team (who assumed the role of a third party developer).
We have just one more obstacle to overcome now: the closing!