Allocating Risk in Real Estate and Infrastructure Transactions: Traditional Indemnities and the Quickly Evolving Role of Reps and Warranties Insurance and Tax Insurance

Description

The parties to real estate and infrastructure transactions are tasked with apportioning often complex risks amongst themselves. Our expert panel will discuss the various risks involved in these transactions, with a focus on tax-related risks, as well as traditional indemnity structures.

RWI and tax insurance, once primarily used in M&A transactions, are increasingly used in real estate and infrastructure transactions, especially in complex transactions. RWI protects parties against financial losses arising from inaccuracies made in the seller's representations and warranties in the purchase agreement where traditional methods of risk allocation and risk management may not be sufficient for complex transactions. A related product, tax insurance, can protect against specific, identified tax risks, such as failure to comply with REIT requirements or uncertainties relating to the tax credits introduced by the Inflation Reduction Act.

Counsel should understand for which transactions they should recommend transactional risk insurance to their clients and be aware of the pros and cons for buyers and sellers. Counsel should also understand how RWI or tax insurance may impact the due diligence process and how to ensure the purchase agreement and insurance policy align with the parties' expectations.

Listen as our expert panel provides a comprehensive overview of transactional risk insurance, including when transactional risk insurance should be considered for a transaction and the risks and benefits of insurance for all parties.