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Selling Commercial Property

I’m thinking about selling a commercial property – what sort of legal steps and issues do I need to consider?

I’m thinking about selling a commercial property – what sort of legal steps and issues do I need to consider?

Everyman Legal has over 60 years of experience in helping clients with selling commercial property so we understand the particular challenges that a seller will face.

Our Selling Commercial Property section contains lots of information to help guide you through the process. Please see:

Where to start?

Unless you are very lucky, the first thing you will have to do is market the property and start putting together a pack of information for any potential buyer to read.

By law or market practice, there are certain things you have to do when selling your property and in our experience, delays are often caused because a seller is unable or in some cases unwilling to help us give a complete package of information to the buyer and their solicitors at the start of the transaction.  If you do not provide the information expected, then it is much less likely that the sale will go through particularly if it is funded by a third party such as a bank.  Lenders are only interested in lending against properties with few or no problems.  The more potential problems they see the more likely they are to refuse to lend.

Our dedicated team of solicitors, based in Witney, Oxfordshire, would be happy to answer your questions.

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Heads of Terms

The basic terms of your sale should be agreed by your estate agent when a buyer is found.  When you have found one, the buyer will almost inevitably agree to buy it by reference to Heads of Terms.  It is worth remembering that generally such key terms are not legally binding.  Both you and your buyer are free to change their mind at any time before you enter into a formal contract and a buyer will only commit to buying it once they know as much as they can about the property. Negotiating Heads of Terms is, however, a key stage in the process as you can consider important issues early enough to be able to walk away from the buyer if you need to without incurring too much time and expense. Therefore, it is always worth taking legal advice from a solicitor at this early stage.

Commercial Property Standard Enquiries (CPSE)

Probably the most important document you will have to produce for your solicitor is the answers to Commercial Property Standard Enquiries (CPSE).  The CPSE are intended as a standard minimum for use in any commercial property transaction and failure to answer the enquiries fully will inevitably cause delays. The enquiries are specifically designed to ensure that you have complied with various legal obligations such as:

  • Asbestos report – Under The Control of Asbestos Regulations 2006 anyone who owns commercial premises must ensure that they have been checked for the presence of asbestos and a plan for its management produced.
  • Fire Risk Assessment – Under the Regulatory Reform (Fire Safety) Order 2005 owners of commercial premises must undertake risk assessments and put in place appropriate steps to minimise fire risks for occupiers of the property. A prospective buyer will expect to receive a copy of the report and to see that appropriate precautions have been put in place.
  • Electrical and Gas systems and equipment – these should have been checked on a regular basis. A buyer will expect to see the latest report and be satisfied that any electrical or gas works carried out to the property have been done to a proper standard and certified to comply with current regulations.
  • Energy Performance Certificates (EPCs) – You cannot sell commercial premises without first producing an EPC.
  • Air conditioning systems – these must be regularly inspected to assess their energy efficiency and effectiveness.
  • Health & Safety file – If building works have been undertaken the Construction (Design and Management) Regulations (CDM) may have been applicable to the works and full details of CDM compliance should be documented in a general Health & Safety file for the premises and available for inspection by any prospective buyer.

In our experience, if there is one thing worse than not answering the standard enquiries, it is to try and provide ambiguous answers.  A popular answer to enquiries is to say that the “seller is not aware”.  A seller who adopts this approach will likely find themselves running the risk of being sued for misrepresentation unless he has taken all necessary steps to find out whether or not he should be aware of something!

Selling Commercial Property that is subject to a Lease

If your property is being sold subject to a lease there will be additional CPSE enquiries for you to answer and additional information that the buyer will want to see.  This will include a copy of the lease, any rent deposit deed, licence for works, rent review memorandum or deeds of variation.

 

For more information

Please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 for a free discussion or email natalie.hopkins@everymanlegal.com

Tax – VAT and Capital Allowances

And finally remember all the taxes and similar issues that apply such as VAT and Capital Allowances.  You may need to charge VAT at 20% on the purchase price.  Capital Allowances add an extra degree of complexity.  We do not give detailed tax advice but if you are not yet receiving such advice, we can always help you find someone who can.

Everyman Legal can guide you through the jungle of legal duties that you may have depending on whether or not you occupy the premises yourself or whether they are leased to someone else.  We’ll also work with your other advisers to make sure that the sale is organised in the best way possible for you.

The first striking thing about Everyman Legal was that the team are very affable and very human - not boring lawyers! They were warm & sincere and I felt confident from the start that they were technically excellent.