The Impact Of Princes Point v. Muss Development Decision

Sellers of U.S. commercial real estate typically agree to make a number of representations, warranties and covenants in the associated purchase and sale contract. The substance and breadth of those undertakings are usually heavily negotiated by sellers and buyers. This issue was recently highlighted in a decision earlier this year by the New York Appellate Division, First Department, in the case of Princes Point LLC v. Muss Development LLC.

Commercial real estate acquisitions in the U.S. are generally completed on an "as-is" basis premised on the deep-rooted real estate doctrine of caveat emptor (or buyer beware). Sellers as a result tend to resist and stridently argue against making any representation, warranty or covenant about the subject property or properties unless it is considered a material inducement to a buyer's entering into the contract or cannot otherwise be determined by a buyer through inspection and customary due diligence methods. The consequence of