Representations & Warranties in a CRE Purchase Agreement
Representations are the seller’s factual promises — their scope, survival, and limits decide whether a buyer has any remedy after closing.
Last reviewed: May 26, 2026 by the BizLeaseCheck Editorial Team
General information, not legal advice.
Overview
Representations and warranties are statements of fact the seller makes about the property and the deal — authority to sell, leases, service contracts, litigation, compliance, and environmental status. If they are false, the buyer may have a claim.
In an AS-IS commercial deal these are deliberately narrow. The fights are over how many representations survive closing, for how long, and subject to what dollar limits.
Topics to check
Each representation is negotiated for scope and qualifiers. "To seller’s knowledge" limits a representation to what the seller actually knew; a buyer prefers flat, fact-based representations for objective matters (e.g., the rent roll is accurate, there are no other leases) and accepts knowledge qualifiers only for matters genuinely outside the seller’s control.
Confirm whose knowledge counts and whether the seller must have made any inquiry — a "knowledge" representation by an entity with no defined knowledge individuals can be nearly meaningless.
Representations that "do not survive closing and merge into the deed" give the buyer no post-closing remedy. A buyer wants a survival period (often 6–12 months) long enough to discover problems. The parties then negotiate a cap (maximum recovery) and a basket/threshold (minimum claim size before recovery).
Sellers often back the survival with a holdback or escrow so there are funds to satisfy a valid post-closing claim; without it, a representation may be only as good as the seller entity’s remaining assets.
A "bring-down" makes the seller’s representations true again as of closing, and the buyer’s obligation to close conditional on that. This protects a buyer against changes between signing and closing — a new lawsuit, a tenant default, or a notice of violation.
Check whether a breach discovered before closing lets the buyer terminate and recover the deposit, or only gives a capped post-closing claim.
Key takeaways
- Prefer flat, fact-based representations; accept knowledge qualifiers only where justified.
- Define whose knowledge counts and whether inquiry is required.
- Negotiate a survival period long enough to find problems (often 6–12 months).
- Use caps and baskets — and a holdback/escrow to back valid claims.
- Add a closing bring-down so representations are true at closing, not just signing.
Official resources
Legal-review notes
Guide confidence marker: Medium confidence.
- Survival, cap, and basket norms vary by deal size and market; figures here are illustrative.
- Post-closing remedies depend on the exact survival, cap, basket, and escrow language and governing law.
Frequently asked questions
What does “representations do not survive closing” mean?
It means the seller’s factual promises end at closing and merge into the deed, so the buyer generally cannot sue for breach afterward. Buyers negotiate a survival period so the representations remain enforceable for a set time after closing.
What is a basket and a cap?
A basket (or threshold) is the minimum total of claims before the buyer can recover. A cap is the maximum the seller will pay for breaches of representations. Together they limit the seller’s post-closing exposure.
What is a “to seller’s knowledge” qualifier?
It limits a representation to facts the seller actually knew, reducing seller risk. Buyers push to remove the qualifier for objective facts and to define which individuals’ knowledge counts.