Thinking of buying a property for your business? A commercial conveyancer is where you should start, and here’s why…
As an avid entrepreneur, you might assume purchasing a commercial property is easy, and can be done alone to save you money. Well, think again, as it is a long-winded and complicated process that should be done right.
Whether you decide on a conveyancing solicitor in Croydon, Cornwall, Cardiff or Carlisle, getting in touch with an expert is paramount to ensure you get it right. But, why is it so important to get professional guidance?
In this article, we’ll be exploring just some of the various considerations a commercial conveyancer will look at before you purchase your new property. It’s far more complicated than it looks, so read on for more…
What is Commercial Conveyancing?
Commercial conveyancing is when a property or piece of land is purchased or sold, with the help of an expert solicitor. The type of property is different from a residential property, and includes buildings from these four sectors:
- Retail (e.g. shops, shopping centres, supermarkets, etc.)
- Leisure (e.g. hotels, pubs, restaurants, etc.)
- Industrial (e.g. warehouses, industrial estates, etc.)
Your solicitor will be able to guide you through the complex process of it all, from your initial interest in the property, to your financial obligations, all the way through to contacts and completion.
The Commercial Conveyancing Process
The commercial conveyancing process is no walk in the park, and requires experts on hand to guide you through it all. The various steps this will include consist of:
- To start with, your solicitor will investigate the title to the property, commissioning any pre-contract searches.
- Then, an offer will be made and contracts will be drafted up and signed. Here, any additional queries will be raised.
- The buyer’s lawyer will then conduct full surveys and searches on the property to see if everything is in order. This is the best stage for a buyer to ask any questions they may have.
- These problems will be relayed to the buyer, and these can then be negotiated with the seller’s lawyer. For example, a lower price might be considered if any problems are noted.
- An Exclusivity Agreement can be drawn up if you’re worried that the seller may pull the property off the market, as they are allowed to do this at any point. However, these can be costly, and should only be considered if really necessary.
- Once this is sorted, a price will be agreed and the exchange will begin. This is when the buyer will pay a deposit on the property of around 10 percent. This means the buyer is legally obligated to buy the property and the vendor to sell it to you.
- A completion date will then be agreed, when the buyer will have to have the rest of their finances in order, including mortgage funds. The seller will also need to be ready to move out at this point.
How is Commercial Conveyancing Different from Residential Conveyancing?
Commercial and residential conveyancing a very different. Whilst residential conveyancing, although complicated, could be done by a layman with the right sort of research, the same can’t be said for commercial properties.
Although it’s certainly possible to DIY, it isn’t advised as it can be extremely long-winded and confusing. The question is, why is this the case, and what are the key differences between the types of conveyancing?
Different Contract Timelines
For starters, commercial contracts are exchanged at an earlier stage. Rather than the contract being signed after all the searches and surveys, a draft agreement will be signed prior to this, leaving the buyer with an opt-out clause. This means that the buyer won’t be bound to the sale if there are any glaring problems with the property.
What’s more, commercial conveyancing is a longer process than residential. Although there is no exact time frame, the complex nature of it all means it can take longer to complete.
Key Components a Commercial Survey Will Look At
As it is, commercial conveyancing is a long and arduous process, but that’s before we’ve even considered the many different elements of it that vary from residential conveyancing.
Some of the key pointers they’ll be considering during the conveyancer’s work include, but are not limited to:
- Access Audit: this will establish how well the business performs with regards to ease of use, for example physical mobility and accessibility throughout the property. This must also include public accessibility if the building will be utilised in this way.
- Asbestos Report: since 1999, asbestos has been illegal to be built with in the UK. So, all non-domestic properties built prior to this date are legally required to have an asbestos register in place, detailing the extent and condition of any asbestos throughout the property. Safe management of this material will also be assessed.
- Commercial Property Standard Enquiry (CPSE): introduced in October 2002, these are a collection of industry-standard pre-contract enquiries which aim to speed up the sale process.
- Energy Performance Certificate (EPC): this rates the energy efficiency of a building from A to G. This is required when any property – residential or commercial – is sold or rented. It includes information about the typical energy use and costs of the property, alongside recommendations on how to reduce energy use.
- Fire Risk Assessment (FRA): if any part of a commercial property is under your control, a detailed FRA is required by law to identify any risks and hazards.
- Indemnity Insurance: the conveyancer will also be able to help you with legal defect insurance policies. These are used when there is a problem with the property, like lack of planning permission or right of way that cannot be resolved quickly or at all.
- Option/Electing to Tax: a conveyancer will be able to identify if a property is ‘waiving the exemption to tax’ or not. If the seller has ‘opted to tax’, they will be able to charge VAT on the property.
Ready to Get Started?
As you can see, the commercial conveyancing process certainly is complicated! The truth is, this is just the tip of the iceberg, so we’d advise that you get in touch with a conveyancing solicitor to make sure you have all the correct information before getting started.
Remember, we’re not the experts, so getting accurate advice from a professional is paramount. We wish you luck with buying your first commercial property!