Zoning and Land Use Contingencies
The agreement will typically include zoning-related contingencies to ensure the land is legally permitted for industrial development. These may involve:
- Verification that the land is pre-zoned for industrial use or subject to successful Change of Land Use (CLU) approval
- A clause allowing the buyer to exit or renegotiate if zoning is not confirmed or if regulatory restrictions arise
- Conditional approval timelines requiring the seller to assist in obtaining layout sanctions or compliance certificates
- Requirement that no encumbrances, reservations, or planning overlays conflict with the proposed industrial use
These contingencies protect the buyer from investing in non-developable land or incurring unexpected legal delays.
Financing and Transactional Contingencies
To secure financial feasibility, agreements often include financing-related contingencies, such as:
- Buyer’s ability to obtain a loan sanction or internal investment approval within a specified period
- Provisions for advance payment, escrow handling, or milestone-based disbursal
- Right to cancel or defer the deal if funding is not secured due to title issues, valuation mismatches, or lender objections
- Adjustment clauses for stamp duty or registration fee changes impacting total project cost
These provisions reduce financial exposure during the closing phase and ensure risk-aligned payments.
Environmental and Site Assessment Contingencies
The agreement typically includes ESA (Environmental Site Assessment) and due diligence contingencies that allow the buyer to:
- Conduct a Phase I ESA or full Environmental Impact Assessment (EIA) before closing
- Withdraw or renegotiate if soil, groundwater, or air contamination is discovered
- Request the seller to provide all past environmental clearances or compliance history
- Include obligations for remediation or indemnity if legacy environmental liabilities are identified
These contingencies ensure that the site is suitable, compliant, and free from hidden environmental risks before final acquisition.