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When our clients are thinking about selling their commercial premises, we advise them not to wait until a sale is agreed to speak with us. The last thing any client wants, after waiting for a sale and negotiating terms, is to find there is a delay in sending out contract documentation which could have been prepared at a much earlier stage.
Nowell Meller’s Commercial Sale Property teams experience, means that from the outset our clients are guided to make sure that essential documentation is collated. So, for example, a buyer will want to ensure all appropriate planning permissions or building regulation approvals are in place, with conditions satisfied, for the authorised use of the premises and any works carried out. Not all selling clients have this paperwork to hand and so we will help clients to obtain this from the local authority.
Within the sections below, you will find some useful tips to put your documentation together, if you are thinking about a commercial property sale.
Before marketing a commercial property
Before instructing estate agents to place your commercial premises on the market, make sure you have the following:
- EPC (Energy Performance Certificate). Commercial premises with a below E rating cannot be offered for sale without improvement works to provide at the very least an E rating. Your selling agents can help with an EPC or, if you are selling privately, please contact us as we have trusted EPC providers who will be happy to assist. View Government Website for EPC Guidance.
- Asbestos Report and Management plan. It is the responsibility of every commercial property owner or occupier to hold an up to date report and plan. In our experience many commercial property selling clients are not aware of the regulations and a buyer is entitled to see the report as part of the due diligence pack. Given it can take a couple of weeks for a specialist company to undertake an inspection and then produce a report, we recommend our selling clients to instruct a specialist without delay. Nowell Meller Commercial Property team can signpost clients to the local experts. View Government Website for Asbestos Guidance.
- VAT. Whilst commercial premises are exempt from VAT, an owner can Opt to Tax. If an Option is in place then VAT has to be charged in addition to the sale price. The marketing particulars must state whether VAT is to be charged as this is an important point for a buyer, especially one who is not VAT registered and cannot reclaim the VAT element. If our selling clients are unsure as to whether VAT should be charged, we recommend they speak with their accountants and write to HMRC. If an option exists, then the written HMRC confirmation should be sent to us. View Government Website for VAT Option to Tax Guidance.
- Planning and Building Regulation Approvals. A buyer is entitled to see all consents dating back 20 years. Whilst some consents are available on the relevant local authority planning portals, on many occasions they are not, so early contact with the planning department is needed. If a selling client has undertaken works which required approval which was not obtained, the Nowell Meller Commercial Property team can advise as to the best course of action. We recommend in these circumstances that our clients speak with us first of all before contacting the local authority.
- Business Rates Exemption. If our clients are selling an empty building, they may well have obtained relief on business rates which restricts a buyer from applying for relief after completion, if they do not intend to occupy straight away. Any correspondence from the rating authority should be provided to Nowell Meller. View Government Website for Business Rating Relief Guidance.
- Capital Allowances. This is a complex area and requires certain contract clauses to protect any capital allowance elections. Our selling clients should contact their accountants early doors and then speak with their Nowell Meller Commercial Property Solicitor. View Government Website for Capital Allowance Guidance.
- Environmental Issues. A buyer may have concerns regarding potential contamination if, for example, the premises has a history of industrial use or the current use requires environmental licences. We recommend our selling clients provide any environmental reports, licences or correspondence they hold.
- Disputes. If a selling client has experienced any dispute relating to the premises, either with a Government body, statutory undertakers or neighbouring properties, then those disputes should be fully outlined to a buyer. A selling client may not be certain whether an issue constitutes a dispute which should be disclosed and our Commercial Property Solicitors will provide advice and guidance in this area.
- Bank Approval if there is a charge secured on the premises. Depending on the type of loan in place, the lender may require all of the net sale proceeds. A Director or shareholder of a selling company, may have provided a personal guarantee which they expect to be released. This is why the Nowell Meller team like to get in touch with the lender right from the outset so there is no misunderstanding leading up to completion. We ask clients to provide their business relationship manager details, account number and holding branch.
- Deeds. If the title to the premises is unregistered, then it is essential to provide us with the original title deeds so that we can check, before a sale is agreed, that the deeds are in order. If you have a charge secured on the premises, the deeds will be held by your lender who will only release them on a Solicitor undertaking. If this is the case, then please provide your Nowell Meller Solicitor with your lender details.
- A Plan of the land or buildings if you only intend to sell part. For more information regarding sales of part see below. View Guidance on Compliant Land Registry Plans.
- Occupational Leases or Assured Shorthold Tenancy Agreements with a schedule of rent arrears if the premises are not sold with vacant possession.
The commercial property sale experience
Once our client has agreed a sale and provided their Commercial Property Solicitor with the information and documents referred to above, Nowell Meller will:
- check the title deeds if the commercial land or premises is unregistered and prepare a list of the relevant documents which is called an ‘Epitome of Title’. We will also obtain up to date index map search and official searches to form part of the Epitome. If the deeds contain a plan or description of the premises, the Nowell Meller team will send this to our client to ensure it contains all of the land or buildings agreed to be sold.
- download up to date office copy entries, title plan and filed documents from the Land Registry if the premises is registered. We send the title plan to our client to check it accurately reflects the boundaries on site.
- prepare the Sale Agreement. We may require input from your accountants or specialists regarding any capital allowance clauses required to protect capital allowance claims.
- prepare a first draft set of replies to commercial enquiries (known as CPSE1) from information already provided as mentioned above. These are sent to our client to check over to make sure all the detail is correct and to complete any missing info. At Nowell Meller we believe that if proper care and attention is given to these replies, it avoids a buyers Solicitor having to raise further numerous enquiries which adds to the timescale. Once completed we send to our client the final set that we have submitted to the buyers Solicitor. If any information comes to light which changes the replies, we ask our clients to advise us without delay.
- contact any lender for an indicative settlement figure. Prior to completion we also obtain an accurate figure based on the agreed completion date.
- meet with our client to sign the documentation once the Sale Agreement is approved and then exchange contracts with an agreed completion date.
- deal with all pre completion requirements, preparing completion statements etc.
- complete and call you to confirm. We will release keys if held by the selling agents, settle any loan, pay your agents and account to you. We then deal with all post completion requirements.
Selling a long leasehold interest
Further work is involved for the sale of long leasehold property. For example, the lease may impose ground rent and service charge payment clauses and any buyer is entitled to make sure those payments are up to date. This means we may need to get in touch with the freeholder regarding ground rents and any management company dealing with service charges. In addition to providing the buyer with replies to CPSE1, we will provide the buyer with replies to detailed leasehold enquiries.
The lease may also contain provisions which either require notice to be given to the freeholder/management company on completion, or the buyer to enter into separate documents or even, in some situations, require freeholder consent to the actual sale taking place.
Nowell Meller consider the lease provisions at an early stage to ensure any notification, documents, consents or other freeholder requirements are dealt with as soon as possible.
On completion we also ensure that any ground rents or service charge payments made in advance by our clients are properly apportioned.
Selling part of commercial land
If our clients are selling only part of their land or buildings, it is imperative to understand the site layout. A selling client only has one opportunity to reserve rights or impose covenants to benefit land or buildings retained.
The Nowell Meller Commercial Property team has considerable experience in making sure selling clients are properly advised regarding rights, covenants and future liabilities and wherever possible we will visit the site to ensure our clients consider all future possibilities.
Selling commercial land or buildings owned by a SIPP or SSAS
The Nowell Meller Commercial Property team has many years experience acting for Pension Trustees in the sale of commercial property and will be more than happy to provide initial consultation for the sale of pension owned premises.
Selling commercial property owned by a charity
Charity Trustees may not always be aware of the charitable legislation relating to the sale of premises. Unless the relevant Charity Act legislation is complied with, Trustees can find themselves in hot water.
Our Commercial Property team has experience of guiding Trustees through the maze of legislation to ensure all the ’i’s’ are dotted and the ‘t’s’ are crossed.