There are elements of a traditional real estate deal that are optional. You may choose from a variety of approaches to funding a transaction or securing appropriate management, but one thing that should be part of any CRE transaction is the confidentiality agreement. This document, also called a non-disclosure agreement, can be either unilateral (one party must keep information confidential) or mutual. It’s designed to protect both parties from harm that can result from sharing sensitive information that comes to light during negotiations. This is a precautionary step; it addresses situations that could possibly occur in the future. For this reason, someone with little experience in CRE might not see the need for a confidentiality agreement. In that case, it’s advisable to rely on the wisdom of those who’ve come before, and have seen the many twist and turns that information takes in the marketplace. Without the protection of this kind, others in the industry can use their knowledge of your financial arrangements, details on property ownership, and strategic information relating to your property to gain an advantage.
For real estate, a confidentiality agreement generally consists of 5 sections:
- description of the confidential information
- items that are to be excluded from the confidential information
- obligations of the receiving party
- time limitations
- miscellaneous provisions
