When selling a commercial property, often sellers want to reach an exchange as quickly as possible in order to contractual commit the buyer to the purchase. There are a number of things that a seller can do ahead of time, to shorten the period between an offer being accepted and exchange of contracts. The list below details some of things which you, as seller, can do to get ahead:
- Have you got an existing charge? If so, do speak to your relationship manager to find out their lead times for producing a redemption statement and discharge form.
- Could you instruct solicitors? If the solicitor you are proposing to use has not acted for you before they will need to on-board you as a client and carry out client due diligence. It is worth starting this process early, in case your solicitor requires information to complete these checks which is not immediately available.
- Should you ask your solicitor to pull together a sales pack? A sales pack comprises: (a) the title documentation; (b) replies to standard enquiries; (c) tenancy and other occupational documentation; (d) management information; (e) planning information; and (f) a construction pack. This can take several weeks to pull together and it is worth having your solicitor put this together at the same time as the building is being marketed for sale, so that this can be provided to the buyer immediately on the heads of terms being issued.
You should also ask your solicitor to look at the title to determine if there are any redundant entries on the title and to make an application to the Land Registry to remove the same.
- Do you know where the deeds are for your building? These should be with your current solicitor (not any former solicitor). However, if the building is subject to an existing charge, the deeds may be with the bank's solicitor. In which case, ask your solicitor about requesting them back in order to deal with the sale.
- Have you carried out any construction work to the building? If so, it would be worth discussing with your accountant whether there are any unclaimed capital allowances that could either be retained by you on the sale of the building or could be passed on to any buyer.
If the works were carried out less than 12 years ago, you should ensure that you have a copy of the building contract and the professional appointments to hand. In addition, you should consider whether: (a) you are able to novate the building contract to the buyer and (b) you have the benefit of, or could procure any, collateral warranties from the professional team?
- Have you obtained all necessary planning consents and building regulations approvals to the works that you have carried out? A buyer will be checking that all works have been done in accordance with the necessary statutory approvals. If you have not done so, then you might want to consider regularising the position ahead of marketing the property for sale or obtaining indemnity insurance against any risk of enforcement action by the local authority.
- Would it be worth putting in searches? If searches are not included within the sales pack, the buyer will carry out its own searches. Searches can take 4 to 6 weeks to be returned and therefore affects how quickly an exchange can be effected. The disadvantage of putting in searches, is that the cost of the same will then be borne by you, rather than the buyer and if you do not find a buyer within 3 months of the searches being returned, they become out-of-date and so unacceptable to the buyer.
- Are you holding the up-to-date insurance schedule? If not, we suggest you ask your insurance broker to send you a copy of this.
- If the building is let, do you have a tenancy schedule? We would suggest that you have an up-to-date tenancy schedule prepared and have this cross-checked by your solicitor ahead of marketing the building for sale. Any discrepancies between reality and the tenancy schedule, could result in a price chip at a later date.
- If the building is multi-let, do you have all the service charge information? The Buyer will expect to see service charge contracts; the service charge budget; and the last three years of service charge accounts. It is worth obtaining these from the managing agent at the earliest opportunity.
- If you have a leasehold interest in the building, have you considered what you will need from the freeholder? This may range from consent to assign your leasehold interest to a third party to insurance information to service charge information. It is worth engaging with the freeholder at an early stage if you need any such consent or information, so that you can flush out any requirements that they might have. In addition, you should ensure that you have all consents (for alterations / underletting) that you need in place. Not only will the buyer ask for this, the freeholder might use this as a reason for withholding their consent, should you require it to the assignment.
- Have you received any tax advice? Have you opted the building to tax? Will VAT be payable on the purchase price? Or, will the transaction be a TOGC for VAT purposes? If the building is held in a SPV, would a share sale be preferable to the buyer, who would make an SDLT saving?
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