Maybe your business has been doing well and it’s time to move to larger premises or perhaps you would like to buy a commercial property as an investor. Whatever the scenario, the process can be complicated without using the support of experienced commercial property solicitors.
Once you have found the dream commercial property, worked out the costs of acquiring the property, secured any loans you might need, put an offer in and had it accepted, you will now need the legal expertise of a solicitor.
When buying commercial property, a solicitor can provide advice and expertise in dealing with the processes that follow to ensure your transaction runs as smooth as possible. But what happens next?
Here is a guide of what needs to happen in a commercial property transaction once your bid has been accepted:
Stage one: Head of Terms
The Head of Terms are the first step in any commercial property transaction. It is a document that goes before the main contract on a commercial property purchase. The document details all the main points of the sale agreement and is drawn up once an offer has been accepted by the seller.
The Head of Terms will include:
- Seller and buyer names
- Property details
- The rights granted over the property
- Buyers and sellers covenants (obligations)
- The purchase price
- The conditions of sale
- Proposed dates and timeframe for the exchange of contracts and completion
A Head of Terms isn’t legally binding. Instead, it lays out a set of intentions for the sale process that will be agreed upon by the parties. Having a Head of Terms drawn up properly can make the buying process that much easier as they act as a clear instruction and eliminate confusion that can easily arise through the process.
Stage two: property investigations
When buying a commercial property, your solicitor will investigate extensively and make enquiries about the property on your behalf to ensure nothing is untoward. This is an important step as checks must be made before a binding agreement to buy the property has been made.
The main investigation will involve the property title. Research will be made into Land Registry to ensure the seller else has rights over the property. During this step, Commercial Property Standard Enquiries will also be carried out.
Other questions that will be answered for the benefit of the buyer include: are there any issues or disputes with the local council concerning the property? What items are included in the price? Have there been any neighbour disputes and are the boundaries clear?
Stage three: contract negotiations
If any issues arise from the steps above, these will be resolved by your solicitor. Pricing and conditions will then be determined accordingly. Your solicitor will then negotiate the contract changes with your seller to form new terms of an agreement.
The negotiations before the contracts are exchanged could go on for a couple of weeks depending on the circumstances and outcomes of the property inspection. The negotiations usually involve the price you are prepared to pay for the property, the deposit amount and defects that you want fixing before you go through with the purchase.
Stage four: exchange of contracts
When new agreements have been made and the deposit has been paid (typically 10 per cent of the property’s purchase price), contracts will be exchanged. From this point, there is no going back without financial consequences. This is a legally binding act.
The signed contracts show that a binding agreement for you to buy the commercial property has been reached. The average time between the exchange of contracts and completion in a standard sale and purchase arrangement is one to two weeks but can be longer.
Stage five: completion date
Once the contract is agreed, arrangements can be made for when the agreed completion date comes around. As soon as the money has been transferred by the mortgage provider (if using one), then the transaction can be completed.
From here, final administration tasks will be completed such as paying Stamp Duty Land Tax within 30 days and registering the ownership with Land Registry.
Leicestershire commercial property solicitors
If you are considering buying a commercial property and need an expert commercial property solicitor to answer any questions that you may have, call us at our offices in Leicester, Hinckley and Market Harborough.
Leicester: 0116 254 8871
Hinckley: 01455 639 900
Market Harborough: 01858 467 181