BELGIUM Law and Practice Contributed by: Pieter Puelinckx, Yves Moreau, Melissa Verplancke and Gauthier Callens, Linklaters
Beyond the legal framework, purchasers gener - ally perform a technical evaluation of the prop - erties involved in the scope of the transaction to assess their physical condition and mainte - nance. 2.5 Typical Representations and Warranties Seller’s representations and warranties (R&W) in real estate transactions generally relate to: • the seller (eg, its rights to enter into the trans - action); • property ownership; • agreements with respect to the property; • absence of litigation; and • permits/environment. In a share deal structure, the seller’s R&W are usually broader and may also include corporate law, employment, accountancy, and tax matters. In the event of warranty breaches, the purchaser can seek compensation for damages suffered or the annulment/termination of the transaction in court (in case of material breach or defect in consent). Alternative remedies or limitation to the purchaser’s remedies may be agreed upon by the buyer and seller. Time limitations on liability for breaches of war - ranties by the sellers vary depending on the type of warranties. Fundamental warranties (typically concerning the ownership of the asset /shares of the target entity) usually remain in force for a period up to 30 years. Tax warranties typically endure until the expiration of the prescription period for claims by tax authorities. For other warranties, parties commonly agree to time limi - tations ranging from 12 to 36 months.
A materiality threshold is often agreed upon for claims for damages by the purchaser due to breaches of warranties as well as a maximum limitation of liability for breaches is often stipu - lated, which is usually a percentage of the pur - chase price (eg, 10%). The implementation of a warranty & indemnity (W&I) insurance covering damage resulting from breaches of warranties given by the seller is not unusual. 2.6 Important Areas of Law for Investors When preparing for a real estate transaction, investors should review: • conditions impacting titles on properties such as pre-emption rights, specific stipulations (such as easements), applicable environmen - tal aspects, and obligations, including poten - tial remediation requirements (see 2.7 Soil Pollution or Environmental Contamination ); • lease agreements legislation; and • for development investments – local zoning regulations affecting project acceptability. Investors also need to consider tax, urban plan - ning, and permitting aspects. Most develop - ment/construction projects require prior approv - als from public authorities, such as building and environmental permits, in addition to specific authorisations based on the business type/size (eg, hotels, restaurants and cafes). 2.7 Soil Pollution or Environmental Contamination To determine if a real estate purchaser (or real right grantee/transferee) is responsible for soil pollution or environmental contamination on a property, it is necessary to differentiate between the regulatory framework (eg, conducting soil surveys and remediation) and civil liability (which
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