Gas Station Sale & Purchase Agreement?

Question

Hi everyone,

Looking into putting some documentation together for a possible gas station wholesale deal in Florida that I have come across. Does anyone have any suggestions for clauses to include in a gas station contract (and/or a template/example one they'd be happy to let me have a look at?) At the moment, i'm just looking at tweaking the standard Florida commercial purchase and sale agreement to suit (with some specific clauses I can think up relating to gas stations, specifically liability for contamination etc).

Thanks, as always!

Michelle

Charlie MacPherson · Answer

I'm doing some gas station brokering right now here in MA.  One of the things to be certain you address is contamination of soil and water.  That should be tested prior to the sale, and if there is a lender involved, they will probably require it.

You also want to address the age, type and condition of underground tanks.  MA requires that all single-wall tanks be replaced by August of this year.

Here in MA, and I suspect in FL, if you were to close on the property and then re-sell, you will acquire liability for selling a contaminated property.

You could be on the hook for the cost of environmental cleanup.

You need legal representation from an attorney with experience in gas stations.

John Thedford · Answer

Not sure what you are trying to do. If you are trying to middle man the deal, you must be licensed or own the property. 475.43 is the governing statute. Brokering without a license, using contracts, is NOT legal in FL. Did you learn this on the net-maybe some guru garbage?

Joel Owens · Answer

Check to see if the state has a cleanup fund to help with environmentally contaminated  sites.

The older gas stations tend to have the single wall tanks and they leak. The question becomes how bad has the leak gotten?

Typically they will have to keep digging out the soil until you get clear margins. If you are looking at an old gas station then likely contaminated.

New stations today have double insulated tanks for the most part so if a failure occurs it is likely kept internal.

More than the environmental clean up is the location of the site with the dirt. If the site is amazing then likely a national tenant will jump on it and handle the clean up. If the site is just okay then tenants have many options to choose from without having to deal with the clean up. The other factor is time. If the national tenant wants to open the business by a certain time the environmental issues can delay and slow things down to fix.

If the site is just okay and contaminated then a small operator comes in and keeps for a gas station maybe. Gas stations are not huge money makers. Gas is almost a loss leader and the owners make money off of lotto tickets and inside food and drink sales.

If it's an old gas station on an over sized lot in a great location then Quick Trip, Racetrac, Wawa, Speedway,etc. might have interest. They won't want to close on it until they get approved for zoning and site plans etc. There is an old gas station here close to me that is being torn down on the highway and become a new Krispy Kreme doughnut store. I am not involved in that deal but it is taking them awhile because of environmental.

No legal advice given.

John Thedford · Answer

Your original post stated "wholesale deal" so I am not sure why one post states "wholesale deal" and the other post you are wanting to purchase the property? You don't need anything special to purchase any property except contracts, DD, and funds. 475.43 does not apply to people purchasing properties--only to those aspects of brokering real estate and licensing required.

John Thedford · Answer

I would not touch this without a professional...in fact at least two professionals. An attorney and a broker that knows what they are doing when it comes to this.

Out of curiosity, what are your plans? Where is the station located? Is it branded? Is it currently in operation? There are a lot of loser locations that are closed, and this type of investment is far more risky than purchase other types of assets.

Don Konipol · Answer

@Michelle Green, as you can tell by the responses, you picked a difficult property type and a difficult state to try to wholesale in!  The biggest problem is that if an  owner, down the line, initiates a lawsuit for soil contamination, everyone associated with the property title or transfer (save the title company) will be looked at as a potential defendant.  If you "only" broker the deal, and you are not licensed, then you are practicing real estate brokerage without a license.  There is a certain amount of protection afforded by obtaining an environmental report - and more by purchasing environmental liability insurance.

Finally, hopefully you are wholesaling using a remote limited liability entity, such as a LLC or Corporation.  Best is to have an LLC with its manager another LLC and its member a corporation whose stock is owned by a "straw" man.  You'd hate to be personally sued on a transaction in which all you did was sign a purchase contract and lip the contract to someone else for a (relatively) modest fee.

Good luck.

Roc P. · Answer

Get a Phase 1 and probably a Phase 2 environmental test done. Not doing anything may open your self up to future problems.

Jeff Kehl · Answer

@Michelle Green There's a time to do it yourself and there's a time to pay professionals. Guess which I think this is? A few thousand dollars in legal fees versus a few million in liability? If the deal doesn't support that you probably shouldn't do it. Just write into the contract something to the affect of 'contract contingent upon legal review by buyers attorney to be completed within X days of execution. Then pass that cost on to your eventual buyer.

Charlie MacPherson · Answer

@Michelle Green This is something that you really need an attorney to address.

I wouldn't dream of trying to draft contract language for a transaction like this.

Michelle Green · Answer

Hi @Warren Kirschbaum - Thanks for your contribution! Depending on how far we get with this deal, it may be a good idea to get your advice on the specific terms of the contract. (I'm working with some people on the ground as I am a virtual investor, so they may already have an attorney in mind that they prefer to use). Regardless, I don't suppose you'd be happy to let me have a look at the contracts/addendums you use? ;-)

Gas Station Sale & Purchase Agreement?

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