Key Legal Steps to Take Before Buying Commercial Property

Purchasing commercial property is a significant investment that requires careful legal consideration. At Paddle & Cocks LLP, our experienced commercial property solicitors provide comprehensive support to ensure your transaction is smooth and secure. Here's a guide to the essential legal steps before buying commercial property.

Conduct Thorough Due Diligence

Before committing to a property purchase, it’s vital to carry out extensive due diligence to uncover any potential issues that could affect the property’s value or your intended use. This includes confirming that the seller has clear ownership of the property and the legal right to sell it. You should also ensure that the property complies with local planning regulations and zoning laws, as these will determine how you can use the space.

Environmental checks are essential too, as any contamination could lead to costly remediation work. If the property is leasehold, reviewing the terms of the lease will also highlight any restrictions or ongoing obligations you may need to address.

Review Financial and Legal Obligations

Understanding the financial and legal obligations tied to the property is essential to avoid unforeseen liabilities. You should review any ongoing service charges, business rates, and taxes, as these will form part of your ongoing financial commitment. If the property is tenanted, it’s crucial to assess the terms of the existing leases to understand the rights of current tenants and your obligations as the new owner. Additionally, confirming insurance requirements and reviewing any existing policies ensures that you are adequately covered after the transaction.

Negotiate and Draft the Sale Agreement

Once you’ve completed your due diligence, the next step is to negotiate the terms of the sale agreement. The sale price and payment terms should be agreed upon, with the payment schedule clearly outlined. It’s also important to establish conditions that need to be met before the sale can go ahead, such as securing financing or obtaining the necessary planning permissions. You should also agree on a completion date, allowing enough time for all necessary conditions to be satisfied.

Secure Financing

Before you can finalise the purchase, it’s important to ensure that your financing is in place. A formal mortgage offer should be secured, subject to the property’s valuation and legal checks. Once the financing is confirmed, you’ll likely be required to pay a deposit, typically 10% of the purchase price, upon exchange of contracts. You should also consider other costs, such as legal fees, stamp duty, and any additional charges related to the transaction.

Exchange Contracts and Complete the Sale

Once all conditions have been met and your financing is secured, you can move forward with exchanging contracts. At this stage, both parties sign and exchange contracts, which legally bind the agreement. On the agreed completion date, the remaining balance is paid, and ownership of the property is transferred to you, finalising the sale.

At Paddle & Cocks LLP, our team of expert commercial property solicitors, including David Formby, Senior Commercial Property Lawyer, is here to guide you through every step of the property acquisition process. Visit our website to discover more about us, or contact us today for a no-obligation consultation and ensure your investment is legally sound. You can reach David at law@paddleandcocks.co.uk or call us at 020 3745 6535.