The need to sell commercial property could arise for several reasons. Examples may be that a business has outgrown premises it owns and needs to upgrade to a larger space, it owns property other than its main premises and no longer requires it – or it may just want to sell a building to free up funds.
Whatever your reasons for seeking a sale, you will want to tread carefully to ensure the process goes as smoothly as possible, and generates the best return.
Here are three key steps to follow. Please note that these relate to the sale of a freehold or long leasehold interest and may not apply to shorter term leases.
1. First, find out how much the property is worth
The value of commercial property can fluctuate depending on factors including the general economic climate, the state and condition of the property and the level of demand for similar properties. Your first step should be to take advice from a surveyor or property agent who will have an understanding of the market conditions and likely sale prices. You can then make an informed decision on the price to set for a sale.
2. Make sure you engage legal advice early
A specialist property lawyer will be able to take a full overview of your property, and identify any potential pitfalls that may hold up a sale or affect its value. It’s always worth taking legal advice as early as you can to help you avoid problems down the line.
As in most transactions or significant business moves, the more you can do ahead of the process, the quicker and smoother it will be. Following the above key steps will help ensure you, as the seller, remain in control from start to finish.
3. Cover the key legal essentials
With the help of your legal advisor, you will be able to cover off key actions including:
- Checking the Land Registry title and any key filed documents to identify any third party consents required, any updates needed to the registered proprietor, and any covenants that could impact on value. Old title entries can also be removed.
- Considering whether landlord or other third party consent is required for the property to be sold and, if so, what the conditions of consent may be.
- Submitting searches against the property. This involves some financial cost but offers the benefit of being able to:
(a) ensure potential buyers are bidding with maximum information available to them and so reducing the risk of later withdrawals and;
(b) take steps to remedy or mitigate any ‘issues’ revealed.
The cost of these searches can often be recovered from the buyer on completion.
- Drafting replies to standard property enquiries that all buyers will expect to see.
- Considering whether all statutory compliance documents are in order and available – for example gas testing, energy performance certificate, fire risk assessment, asbestos management plan and legionella testing.
- Producing a comprehensive property pack including all documents above plus all relevant property management information so that it is ready to be issued to a buyer’s solicitors immediately upon heads of terms being agreed.
The Thrings Commercial Property team specialises in supporting business owners in the buying and selling of business property.
