A Guide to Selling Commercial Property
Posted:27th July 2023
Looking to cash-in on an investment property, free up capital for another project or move on from a business venture? You may be thinking of selling on commercial property and not know where to turn next. Here are some key points to consider before selling your property.
Heads of Terms
Before you head into the complex legal process, you will need to agree outline ‘Heads of Terms’ with a buyer. These terms should include the purchase price, buyer and seller’s details (are they individuals or companies?), basic property information and timescales to completion.
You may also want to stipulate whether the sale is conditional upon anything, such as securing alternative premises. A buyer may want to make the purchase conditional on planning permission.
You need to consider whether a straight sale is what you need commercially. Would it be more beneficial to grant a lease or retain overage rights for a passive income? You should speak to a solicitor to assess your options before you agree a deal.
The buyer will want to flush out information about the property (known as due diligence). Although the majority of this will be done between the solicitors, there are steps that can be taken to make this process quicker and easier:
- Ensure you have up to date Fire Risk Assessments and Asbestos Reports
- Locate any documentation relating to service media such as boilers and electrical circuits
- If you have any original title documents or old documents from a previous solicitor, compile them
- If there is existing lending secured against the property, request a redemption figure from them and speak to your relationship manager, if you have one.
If there are occupiers in the property, you will need to ensure you have a copy of the lease or tenancy agreement to hand. You will also need to make it clear to the buyer whether or not these occupiers will be remaining in the Property or vacating on completion. This avoids it being an unexpected issue during the due diligence process and gives an accurate picture as to the timescales if they are to vacate.
Crucially, you should have your team of experts ready in advance of agreeing a sale. You will need an accountant (to advise on the tax implications of the sale), financial advisor (for future finance and advice on investment), agent (to sell the property and help negotiate terms) as well as your solicitor who will advice and deal with the transaction throughout, as well as offering valuable initial advice prior to agreeing a sale.
Speaking to a solicitor early means you can pro-actively compile information and agree Heads of Terms which makes the process quicker and saves costs. Moreover, if there is tight timeframe, your solicitor will be better equipped to meet it if they are consulted in advance.
If you are thinking about selling your commercial property, contact a member of the team at EMG Solicitors for expert advice and guidance, no matter what stage you are at.