Your Guide to Understanding Commercial Conveyancing

If you, or your business, owns or makes use of non-residential land, buildings or other property, it is almost guaranteed you will encounter commercial conveyancing at some point. The process can involve complex legal jargon that can take a while to wrap your head around. Our comprehensive commercial conveyancing guide simplifies the key concepts of the process, in addition to advising you on where to find quality conveyancing solicitors. 

What is commercial conveyancing? 

Commercial conveyancing is essentially the legal process of buying or selling an interest in property or land on behalf of an individual or company, either for use of premises by business or as an investment in property as a business. The transaction is usually managed by a commercial property (or corporate real estate) solicitor. It is an often-lengthy process that requires in-depth scrutiny of comprehensive documentation to adhere to legal standards - this is why it is essential to get it right.

What is the difference between commercial and residential conveyancing?

Commercial conveyancing can often be significantly more complex than residential conveyancing due a number of factors:

• extensive legal regulations that will need to be observed
• Higher value than residential properties
• More complex titles
• Rights and easements may be more critical
• Documentation is less likely to be in “standard form”
• More complex documentation such as conditional contracts, options, further payments, etc
• Connection to corporate transactions, such as selling or buying a business.

Property lawyers advising businesses, property developers or property investors in this respect are required to call upon knowledge of several areas of law, including land law, contract law, banking and finance, business law, planning law, construction and much more.  It is crucial that they have sight of the “Big Picture”. 

In what instances might we see commercial conveyancing?

Commercial property makes up a significant proportion of the UK economy, and includes:

• Retail units
• Restaurants and bars
• Offices and warehouses
• Industrial sites
• Leisure, hotels, car showrooms and petrol stations
• Land for development
• Agricultural and rural land and property

We will see commercial conveyancing when a freehold or leasehold interest in the above property is purchased or sold by a company or individual that intends to either use the property as a premises for their own business or as an investment opportunity. 

What is the difference between freehold and leasehold?

There are two common ways to own a property: freehold ownership or leasehold ownership.  Freehold and leasehold titles can be owned by individuals or by companies. Freehold is the absolute ownership of both the property and the land it inhabits, whereas a leasehold means you’ll lease from the freeholder for the right to use the property for a fixed time period. Freehold ownership will remain in place and will be subject to a leasehold interest. 

What is a commercial lease?

A commercial lease is an agreement for property or land that is leased for business purposes. A commercial lease will need to be negotiated with the landlord’s solicitor. A commercial property solicitor acting for the prospective tenant will investigate the title, and make enquiries via CPSEs (Commercial Property Standard Enquiries).

Once the lease document is agreed upon, it is signed by both parties. Any stamp duty is paid and the lease is registered at the Land Registry if required. The tenant is then able to move in and begin to operate the business from the premises.

What does the commercial conveyancing process involve for sellers?

Once premises are put on the market, the conveyancing process has begun. These are the tasks the seller’s conveyancer will be responsible for:

• Making sure the seller has completed the appropriate forms 
• Confirming what is included in the sale with the buyer’s conveyancer
• Drawing up the sale contract
• Compiling relevant documentation to provide the buyer’s solicitor
• Communicate with the buyer’s conveyancer and negotiate key terms including  completion date on behalf of the seller
• Exchange contracts
• Arrange key collection
• Approve the Transfer Deed from the buyer’s solicitor

What does the commercial conveyancing process involve for buyers?

If you’re looking to buy a commercial property, your conveyancer will be responsible for:

• Investigating the title (who legally owns the property)
• Arranging for commercial property searches to take place
• Liaising with the seller’s conveyancer and negotiating the contract
• Ensuring all finances are in order
• Advising the buyer as to potential risks and benefits
• Arrange exchange of contract and transfer funds on completion day
• Paying Stamp Duty Tax
• Register the buyer as the new owner via the Land Registry

What are Commercial Property Standard Enquiries?

If you are in the process of selling or leasing your non-residential property, it is likely you will be asked to complete Commercial Property Standard Enquiry (CPSE) forms.

There are currently 7 possible CPSE forms you could be asked to complete. The specific form or forms you are asked to complete will depend on the nature of the transaction.

With this in mind, you could be asked to complete more than one of the following form(s):

• CPSE 1 – General pre-contract enquiries for all commercial property transactions;
• CPSE 2 – Supplemental pre-contract enquiries for properties subject to tenancies for commercial use;
• CPSE 3 – Supplemental pre-contract enquiries for commercial property on the grant of a new lease;
• CPSE 4 – Supplemental pre-contract enquiries for commercial leasehold property on the assignment of a lease;
• CPSE 5 – Enquiries before the surrender of a rack rent commercial lease;
• CPSE 6 – Supplemental pre-contract enquiries for properties subject to residential tenancies;
• CPSE 7 – General short form pre-contract enquiries for all property transactions.

It’s worth noting Form CPSE 1 is designed to primarily cover all forms of commercial property transactions. It will contain questions relating to:

• environmental issues
• boundary matters
• the physical condition of the property
• any notices or disputes affecting the property
• capital allowances

The form is very extensive and is designed to provide sufficient and in-depth information relating to the property.

CPSE’s 2-7 are supplemental enquiries for use alongside CPSE 1 and are more tailored to the individual circumstance surrounding a particular property transaction.  For example, when acting on behalf of a Landlord granting a new lease to a Tenant, the Landlord will be expected to complete both Form CPSE 1 (in relation to the property) and Form CPSE 3 (specifically relating to the grant of the new lease).

If completed incorrectly, CPSE forms can cause you a great deal of problems. It is therefore important to seek expert legal advice to ensure their completion as accurately and comprehensively as possible. It is important you avoid being subject to liability when disposing of your commercial property.

Is there any way to speed up the conveyancing process?

The conveyancing process can be lengthy, and you’ll be eager for it to be completed as soon as possible. Here are a few things you can do to speed things along:

• Complete and return any documents to your conveyancer promptly. These may include proof of identification, signed legal contracts and agreements, and other documentation pertinent to the property being bought / sold. 
• If you are buying a property, you may need to pay a deposit just before contracts are exchanged. It is crucial that you advise your conveyancer if any of these funds are being, or are going to be, provided by someone else such as spouse, parents or friends. In a commercial context, they will often need to conduct additional checks and liaise with your mortgage lender (if you are using a mortgage), and this can take some time. Therefore advising your conveyancer at the start of your transaction can help to avoid delays.

Seek help from commercial law firms and find a quality commercial conveyancing solicitor

The key to a successful conveyancing process is working with a reliable and experienced conveyancing lawyer. When it comes to the acquisition and sale of property, our commercial property solicitors at Paddle & Cocks LLP are always here to help. With a breadth of experience across a range of commercial clients, our friendly team can assist you with all of your commercial real estate needs. 

We deal with any matter related to commercial property - competently & comprehensively managed - and can assist you with a number of financial transactions, including but not limited to:

• Property management
• Lease renewals
• Break notices; easements
• Rent reviews;
• Restrictive covenants
• Right to light
• Dilapidations
• Service charge disputes
• Claims for possession
• Buying and selling commercial real estate
• Leases
• Licences to assign
• Landlords' consent to alter, vary or assign leases
• Refinancing
• Surrenders of commercial leases
• Splitting of title
• Option agreements
• Overage agreements
• Sale and purchase of freehold reversions (ground rents)
• Granting of easements
• Joint ventures and development agreements
• Commercial litigation

What’s more, our services extend across a wide variety of sectors. These include:

• Agriculture – the sale and purchase of agricultural land;
• Retail – sale or purchase of beauty salons, shops, tea-rooms, launderettes, including dealing with the asset or share purchase agreement if relevant;
• Healthcare – GP surgeries and medical centres
• Hospitality – Sale or purchase of guest houses and hotels;
• Equestrian – Sale and purchase of livery yards, riding schools and other equestrian establishments.
• Kennels & Catteries
• Industrial – sale and purchase of industrial units.

So, if you’re in need of a quality conveyancing solicitor then please contact us at our experienced law firm today.