If you are considering purchasing or selling your commercial property, it is imperative to carry out each step of the process with care and close attention to detail, to protect your current and future financial and business interests. As a London-based law firm specialising in commercial property, AQ Archers is well versed in the end to end process of commercial property transactions and will handle your matter fully on your behalf, quickly dealing with any issues that arise on the journey to completion.
The following legalities need to be addressed before a sale and purchase can be completed:
What are the steps in a commercial property transaction?
It is helpful at the outset to understand the key steps taken during a typical commercial property transaction; these are as follows:
The importance of due diligence
The importance of undertaking thorough due diligence cannot be overstated. This involves:
Your accountant and other professional advisors will also conduct due diligence in terms of the rental yield and value of the property.
While the due diligence is being conducted, you may wish to enter into an exclusivity agreement with the seller. This will state that for a specified time, whilst due diligence is being undertaken, the seller will not negotiate with any other interested parties.
These types of agreements are difficult to negotiate, and there are limited damages available for a breach. Your solicitor will advise you as to whether asking the seller to enter into an exclusivity agreement is in your best interests.
Exchange of contracts
A well-written Heads of Terms will outline much of the sale and purchase agreement in advance of the drawing up of the contract, which may make the process run more swiftly and smoothly (subject to due diligence findings).
Once the contracts have been drawn up, final negotiations have been completed, a deposit paid, and the documents signed, they will be exchanged.
From this point onwards, you are legally obliged to complete the transaction. If you withdraw from the deal, it is likely you will incur liability.
Completion of the sale
The completion date is usually specified at the time contracts are exchanged. The final balance of payments is made at this time, and you officially own the property.
There are usually severe penalties if completion is not made on time. As a purchaser, if you fail to complete by the specified date, the seller can charge you for loss of income, pursue a claim for damages, and take steps to terminate the contract and retain the deposit.
Your lender can also charge interest on outstanding completion monies.