Commercial Property Transactions
Disposing of commercial premises: The landlord’s perspective
Whether you are an owner-occupier or a freehold landlord of commercial premises, careful planning is required to ensure a smooth sale. Assuming that you have obtained a valuation and tax advice and are ready to market the property, what are the key legal considerations?
Firstly, as your solicitor, we will want to see evidence of your title to the property. Many properties these days are registered at the Land Registry and so you should confirm your title number to your solicitor who can download the full details directly from the Land Registry website.
If your property has not been registered you will need to locate your original title deeds, as the sale will trigger compulsory registration for the buyer who will need to produce these to the Land Registry following completion.
If the deeds have been lost an application will need to be made to the Land Registry for possessory title and you should contact us as soon as possible.
Energy Performance Certificates (EPC)
Commercial properties require an EPC prior to sale or lease, which must be available to the buyer or tenant before you complete. You will need to instruct a qualified energy assessor who will need to inspect the premises in order to evaluate the building’s energy efficiency.
Once negotiations have been concluded, and you may find it advantageous to involve us in these discussions, we will draft the contract and send it to the buyer’s solicitor. This will state the agreed price, the details of the parties and the terms on which the sale will take place.
If the sale is conditional, for example that planning permission is to be obtained or where consents are required, these provisions will need to be dealt with in the contract.
The contract will also confirm the completion date. Completion may be dependent on the buyer obtaining finance, so you should find out about their position at the outset in order to agree a realistic time-frame.
The buyer will usually ask for commercial property standard enquiries. These are industry standard enquiries and are very comprehensive. They will ask you to provide information in relation to matters such as the planning history of the property, the condition of the property, the VAT position and details of any existing tenants.
So as to avoid any delays in progressing the sale you should try and gather as much information as you can at an early stage so that the replies and any ancillary information can be provided to the buyer’s solicitor at the outset.
To some extent, the buyer must rely on their own inspection of the property and they will usually be recommended to carry out their own survey and searches as to the condition of the property.
Under the Control of Asbestos Regulations 2006 you are legally obliged to have carried out an asbestos survey to identify any asbestos used in the construction of the property and, where there is any, to provide a plan showing how this should be managed.
Unless the date of construction indicates that there is no asbestos present in the property (i.e. a new build premises) you will have to provide the buyer with the asbestos survey.
If this has not yet been carried out, your buyer may accept that they will have to carry out the survey after completion or it may become a condition of the contract that you provide a survey prior to completion. You would then need to negotiate who is liable for the costs, if any, in dealing with any recommendations for removal or management of any asbestos found.
You will need to confirm if you have elected to waive the VAT exemption that applies to property. This will be important to the buyer as they will want to know if VAT is payable on the purchase price and they will want to see a copy of your notice.
You may be selling your freehold reversion subject to existing leases. If so, the contract should provide for this and you will need to consider assigning the benefit of any rent deposit deeds or other ancillary documents. You should also consider what, if any, continuing obligations you may have as the landlord under those leases and to seek a release on any such obligations in the contract, where possible.
You will need to make sure that all rents are paid as at the date of completion and if there are any arrears or existing breaches of covenant by the tenants that these are disclosed to the buyers.