Key Takeaways
- Purchase agreement representations and warranties with 6-12 month survival periods protect buyers from undisclosed defects.
- Lease risk allocation should clearly define maintenance responsibilities, insurance requirements, and indemnification obligations.
- Vendor contracts must include insurance requirements, indemnification, warranties, and (for large projects) performance bonds.
- Risk transfer through contracts is a complement to insurance—both are needed for comprehensive risk management.
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Test Your Knowledge
1.How does contractual risk allocation transfer risk in real estate?
2.What risk allocation provisions should be in every vendor contract?
3.How does lease risk allocation protect the property owner?