Legal Aspects of Portfolio Transactions in the Real Estate Market

This article first appeared in the Retail Parks Report 2026 by Avison Young, October 2026

Portfolio transactions, involving the simultaneous acquisition or disposal of multiple properties as part of a single process, are becoming an increasingly significant part of the retail market. In the last year alone, we have seen several such acquisitions. Such a transaction enables investors to enter the market efficiently or to expand their existing portfolio. 

However, their complexity goes far beyond the simple multiplication of transactions involving individual assets – it requires a distinct approach to both the legal due diligence process and the structuring of transaction documentation, as well as risk management on both sides of the project. 

The Specifics of Due Diligence in Portfolio Transactions

The due diligence process in portfolio transactions differs fundamentally from the legal due diligence conducted in relation to a single property. The main difference stems from the scale of the project – a portfolio may comprise several dozen or even several hundred properties, involving thousands of lease agreements, dozens of administrative decisions and a long legal history for each asset.

In practice, this means that the scope of the study must be limited in a pragmatic manner. A full due diligence review of each asset, at a level of detail appropriate to a stand-alone transaction, would often be unfeasible within the transaction’s timetable and budget. Consequently, the parties usually adopt a risk-based approach, focusing on the issues of greatest economic and legal significance.

With regard to lease agreements – which usually constitute the most extensive category of documents – various methods are used to limit the scope of the review. The most common approaches include reviewing only lease agreements above a specified rent threshold (e.g. agreements generating more than 5 per cent of the revenue from a given property), analysing a representative sample of agreements from each location, or limiting the scope of the review to selected key legal issues (such as break option clauses, rent indexation or restrictions on the transferability of rights under the lease agreement).

It is essential that the agreed scope of due diligence be clearly agreed between the parties and reflected in the transaction documentation, in particular with regard to the seller’s representations and warranties, documents deemed to have been disclosed as part of the transaction, and the buyer’s protection mechanisms (including under W&I and title insurance, as discussed below).

Transaction documentation

The structure of documentation for portfolio transactions is usually based on a two-tier model. The most common approach is to include, at the first level, a framework agreement governing the entirety of the relationship between the parties in relation to the transaction, including, in particular, matters such as the mechanism for determining and allocating the price across individual assets, the conditions precedent for the entire transaction, the rules governing the interdependence between individual assets, the timetable for the settlement of specific assets, and the consequences of being unable to settle the transaction in respect of one or more assets. At the second, operational level, individual sales contracts are then drawn up, based on a standard template which is replicated for each asset in the portfolio, subject, of course, to any specific characteristics identified for a given location.

This approach enables negotiations to be conducted effectively, as the parties focus on a single set of general provisions rather than negotiating each of the dozens of agreements separately. At the same time, it requires a careful definition of the relationship between the framework agreement and the individual sales contracts, including the hierarchy of provisions in the event of any conflict.

An alternative is to implement the project solely at the level of sales contracts – however, in such a case, this requires a detailed linkage between the individual contracts relating to specific locations, particularly with regard to so-called cross-defaults and the terms relating to any potential withdrawal from the relevant contracts, which may affect the efficiency of the entire negotiation process. 

The role of transactional policies (W&I insurance and title insurance)

Warranty & Indemnity (W&I) and title insurance are an integral part of portfolio transactions. These policies provide the buyer with protection in the event of a breach of the representations and warranties made by the seller, or a defect in title, thereby effectively transferring the risks from the seller to the insurer.

Nevertheless, to ensure that these products are genuinely effective for the buyer, it is worth structuring them, defining their scope and carrying out a market analysis of insurers from the very earliest stages of the project – in practice, as soon as the scope of the due diligence is being defined. Involving insurers in the process at an early stage makes it possible to confirm the potential scope of insurance cover even before the actual legal due diligence begins, or to confirm other requirements set by insurers, so that the transaction can indeed be insured to the fullest extent possible. 

This is particularly important in the context of the limited scope of due diligence typical of portfolio transactions. The insurer may specify the minimum requirements for a legal due diligence process that must be met in order for specific risks or areas of liability to be covered by the policy. This helps to avoid a situation where the buyer only discovers, once the due diligence process has been completed, that certain categories of risk cannot be insured due to the insufficient scope of the due diligence carried out.

Early collaboration with the insurer also makes it possible to better align the structure of the declarations and warranties in the transaction documentation with the requirements of the policies. As a result, the scope of insurance cover may be broader, whilst any exclusions may be more predictable and can be addressed at an earlier stage of the negotiations.

Summary

To sum up, the successful completion of a portfolio transaction requires close coordination between the due diligence process, the negotiation of transaction documentation and the approach to liability arrangements between the Parties, including through the use of the insurance products outlined above from the very outset of the project. A pragmatic and structured approach to these elements from the very start of the process usually makes it possible to carry out a secure and effective transaction, even in the case of portfolios of significant scale and complexity.

You can read the full report here.