There are many things to consider and get in order for selling your commercial property. This can be overwhelming. Although with some careful planning and preparation you can ensure that the sale is a smooth and successful transaction.
The first question a seller of a commercial property asks, is “how long will the sale take to go through?” Speed is often essential. To ensure that a sale progresses smoothly and quickly, it is advised that a seller has the documents and paperwork required to progress the sale with their solicitor prior to finding a buyer. Here are just a few of the things that can expedite the sale.
Every transaction has sets of standard enquiries that apply and need to be dealt with every time. Providing early replies to these enquiries helps avoid the buyer raising a lot of unnecessary points down the line.
There are reports that a buyer will usually look for such as a Fire Regulation Assessment and an Asbestos Survey. The responsible person should carry out these reports. That person may be the freehold owner or the occupier. For any properties built before 1999, there is requirement for an asbestos report. If you do not have up to date surveys, then commissioning them in advance will help the transaction along.
It is a legal requirement to have a valid EPC in place prior to selling a freehold or leasehold property. If you do not have a valid EPC then one must be commissioned before the property is marketed. There is a standard minimum energy rating required, therefore, improvement works may be needed to bring the rating up to the minimum standard. Commissioning an EPC prior to marketing the premises gives time for any work to be dealt with.
The buyer will carry out a local search which reveals planning permissions and building regulation consents registered with the local planning authority. These documents (including any warranty or guarantees) should be passed to your solicitor if planning permission has been applied for during your ownership, or recent work has been carried out to the property.
You will need to disclose to the buyer if you have claimed Capital Allowances during your occupation of the property. Discuss any Capital Allowance requirements with your tax advisor and pass on to your solicitor before the sale gets underway. Doing this will allow information to be inserted in to the draft contract and replies to CPSEs upfront rather than at a later point. Any later additions could potentially delay approval of the documents.
If you have elected the property for VAT you should inform the agent before the property is marketed. The buyer can then ensure that it has the necessary funds to complete at the start of the transaction. To prove that the property is elected for VAT the documentation from HMRC will be required .
If the property is leasehold invariably you will require the landlord’s consent to the assignment of the lease. You should open discussions with the landlord as soon as you decide to sell. Your solicitor will need to negotiate the terms of the licence to assign the lease with the landlord’s solicitor. In any event you will need to budget for the payment of the landlord’s costs for the licence to assign.
Make sure you gather as much information as you have access to if a service charge is paid. Typically the buyer will require the last three years accounts, the current year’s budget and contact details of any managing agents or management company. There is requirement to cover the management company’s costs so factor that in.
You may hold a share in the management company. If that’s the case then look out the share certificate, it will need to be transferred to the buyer on completion.
It is impossible to pre-empt all the enquiries and documents a buyer and its lender may require. Having as much information as possible prior to putting your property (or business) on the market will expedite the sale.
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