The Enforceability of Confidentiality Agreements

Can You Keep a Secret?

Manatt's Tom Muller, co-chair of the firm's Real Estate and Land Use practice, discussed with how enforceable confidentiality agreements within letters of intent are in the beginning stages of a real estate deal.

Muller told that most real estate deals begin with a letter of intent spelling out the principal terms of the deal, and the only enforceable paragraph of which is an agreement to keep the transaction strictly confidential. Before due diligence starts on a real estate acquisition, the seller usually requires the buyer to agree to keep anything learned about the property confidential.

As a technical legal matter, in general they are enforceable. But as a practical matter, it is hard to imagine a situation in which one could satisfyingly enforce them, said Muller.

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