Sales and Purchases

Once you have found the right property that fits in with your objectives and budget, there are several steps in the commercial conveyancing process that we will support you with:

1. The finance – you will need to consider your options for financing the purchase, for example using cash reserves, third party investment, bank finance or using your pension fund. It is also at this stage that you may wish to obtain a survey of the property while we carry out the due diligence;
2. Due diligence and searches – this is one of the most important stages which will include raising pre-contract enquiries, usually by reference to the Commercial Property Standard Enquiries (CPSEs), inspecting the title and carrying out searches. The type of searches we carry out depend on the property, its location and your requirements. The searches will generally include a local search, drainage and water search, environmental and flooding search and a chancel search. Should there be any complications or queries, we will address them at this stage and keep you fully informed of progress;
3. The Contract and Transfer – alongside carrying out the due diligence, we will negotiate the form of Contract and Transfer that will protect your interests and leave no room for ambiguity;
4. Exchange and completion – this will involve exchanging contracts, which will mean you are legally tied into the deal, at which point a date will be set for completion when you become the legal owner if you are purchasing the property, or you receive the sale proceeds if you are the seller; and
5. Registration and outstanding payments – the final stage will be to register the property with the Land Registry and settle any outstanding Stamp Duty Land Tax that may be due.

As with residential property, there is a difference between buying a freehold or leasehold commercial property.

Buying a freehold property means that you are buying both the land and the building, making you the ultimate owner with complete control over your property. By contrast, buying a leasehold property will mean that you are purchasing a lease allowing you to use and possess the demised property for a certain amount of time.  Essentially, you are entering into a lease and will become a tenant. A lease is a contract and generally is considered a more restrictive form of ownership than owning a freehold.

There are two types of lease when dealing with commercial property:

• long leases typically granted for terms of 999 years, 150 years or 99 years, for which you pay a premium and a nominal ground rent; and
• short leases, otherwise known as a rack rent leases, which are usually granted for much shorter terms, typically no more than 10 years. There are generally no premiums paid for these short leases but they usually reserve a higher annual rent based on the market, type of property and location.

For the purposes of this section, we are dealing with the process for acquiring a long lease. For the process relating to short term leases, contact a member of our Commercial Property department.

Deciding on the appropriate selling price will be important and you may wish to seek expert advice through a valuation.  This advice can also provide you with useful insight into the current market environment, leaving you in a strong position.

Once you have a price in mind, the next stage should be to prepare the property for viewings. It is also recommended to start collating your paperwork in readiness for the enquiries that will come from the buyer, for example the Energy Performance Certificate (EPC), VAT paperwork, planning history, fire risk assessment, asbestos survey, details of any works carried out, business rates etc. In our experience, being prepared with these documents will reduce the potential for delays in the coming months.

Once a buyer has been secured for your property, we will assist you with the commercial conveyancing process in the following ways:

1. Answering pre-contract enquiries, usually by reference to the Commercial Property Standard Enquiries (CPSE). These pre-contract forms contain extensive enquiries about the property and we can assist you in providing suitable replies. These enquiries can be treated by a buyer as representations about a property which, if are found to be misleading or untrue, could leave you in a compromised position so it is important all replies are accurate;
2. The Contract and Transfer – once the buyer is satisfied with the answers to their enquiries, due diligence has been completed and negotiations have been finalised, we will work with the buyer’s solicitors and negotiate the form of Contract and Transfer;
3. Restrictions on title – if you own a leasehold property or premises on an industrial estate it may be that you require third party consent to the sale and sometimes this can involve additional documents such as a Licence to Assign or Deed of Covenant. We can advise you if these are required and deal with the satisfaction of those restrictions by putting in place the necessary documentation; and
4. Exchange and completion – at this stage, contracts will be exchanged and the deposit paid to you from the buyer with a date of completion then agreed (or it may be that exchange and completion are simultaneous), at which point ownership will transfer to the buyer.

Whether you are buying or selling, there will be associated costs including but not limited to:

• commercial estate agents and auction houses, if relevant;
• legal fees from your chosen solicitor;
• as a seller, there may be a mortgage redemption fee applied and there may be expenditure required to prepare the property for viewings;
• if third party consents are necessary, often the seller has to pay the legal fees for the third party who needs to provide their consent. The fees will depend on the type of documentation required; and
• for buyers, there will be additional costs for you to consider:
  • the deposit and cost of the property
  • surveyor fees
  • Land Registry fees
  • property search fees
  • Land Transaction Tax (LTT) or Stamp Duty Land Tax (SDLT), if applicable
  • property insurance
  • renovation, removals and installation costs that may be needed
  • when buying a leasehold property or premises on an industrial estate or office space, there may be ground rent, maintenance and service charges throughout the course of your ownership

This varies based on several factors, including the complexity of the deal, due diligence requirements and the efficiency of all parties involved. On average, it may take anywhere from two to six months to complete a commercial property sale or purchase. However, the timescale can be far shorter or longer.

Heads of terms are generally drafted during the early stages of a purchase, prior to solicitor involvement, to set out the proposed details of the deal agreed in principle. These are usually negotiated on your behalf by an agent. Typically, the Heads of Terms will include the following information:

• details of the buyer and seller of the property;
• solicitors details;
• details of the property;
• the agreed upon purchase price;
• any conditions or restrictions applicable to the property; and
• the proposed timeframe and completion date.

While not considered to be legally binding, Heads of Terms are useful documents as they can provide clarity for both parties, and reduce the risk of disputes or delays happening in the future.