Selling a Business Premises – a Practical Guide

PUBLISHED 29.07.19

Following on from our practical guide on buying or leasing business premises, the logical second instalment of practical guides would be in relation to selling your business premises:

When you are about to sell commercial premises, we appreciate that the legal procedure behind your transaction is just one of many complexities in your periphery.

It is important, however, to ensure that in whatever capacity you are involved, that you are represented by a specialist who can act in your best interests and that you are well informed of the processes throughout.

This short and simple guide aims to summarise to you what to expect over the course of your commercial premises sale with Dunn & Baker in the hope it will make your next commercial transaction seem clearer and more informed:

 

1. Instruction

When contacting Dunn & Baker, you will receive a response providing an estimate of costs. If you wish to proceed with Dunn & Baker as your lawyer we will attend to ID checks and send out paperwork we require you to complete before beginning to act on your behalf.

 

2. Pre-Contract Steps

As the seller, it is our responsibility to carry out preliminary investigations before providing a Contract pack to the buyer (a pack containing title documents, a draft Contract, answers to pre-contract enquiries etc.)

We will therefore need to identify the property you are selling and obtain and review any deeds in relation to the property from the Land Registry. We will need you to complete the standard enquiry forms (the CPSE enquiries) and provide us with any building regulations or certificates (such as the EPC) that are relevant to the property. Furthermore if the property is leasehold we will need a copy of the lease and any other documents ancillary to the lease such as rent deposit deeds, licence to alter, any deeds of variation etc. The buyer’s solicitor will review the information we have provided and carry out their own investigations on the property. They will revert to us with their additional enquiries and negotiate the Contract with us. We will consult with you during this process to answer these enquiries to the best of your knowledge.

Our next step will be, based on your instructions, to draft the Contract. We will place this draft Contract into a pack with all other information we have obtained at this stage and once our pack is complete, we will send this to the buyer solicitors.
As the seller, it is our responsibility to carry out preliminary investigations before providing a Contract pack to the buyer (a pack containing title documents, a draft Contract, answers to pre-contract enquiries etc.)

 

3. Contract Stage

The buyer will negotiate with us the Contract and once approved, we will provide you with a report on the Contract and will send you the Contract for signing. Furthermore if the property is leasehold then it may be necessary for us to liaise with your Landlord’s solicitor to negotiate and agree a licence to assign.

Usually, the buyer’s solicitor will also have drafted the Transfer deed which will need to be signed by you prior to completion and also reported on at this stage.

 

4. Exchange of Contracts

Once you are satisfied the Contract matches your needs, we will exchange Contracts with the buyer. It is at this time that the agreement becomes legally binding. We will contact the buyer’s solicitors and agree we have reached an agreement and will confirm when we anticipate completing on the purchase.

 

5.Completion

At this point, if you have a mortgage, we will need to request a redemption statement from your lender so we can ensure it is paid off upon completion.

If the property is leasehold we will also work out the apportionment of the rent, service charge and insurance for you and the buyer.

On the day of completion, the buyer’s solicitor will release the funds to us and once received we will release the keys and confirm completion has occurred.

We will then redeem your mortgage (if any), send the relevant documents to the buyer and pay any agent fees.

Finally, we will allocate the net sale proceeds in accordance with your instructions.

 

If you would like to discuss any potential commercial property transactions, please contact a member of our Commercial Property Department today:

Stephen Harris, Partner – Commercial Property (Head of Department)

Neil Starr, Associate – Commercial Property

Julia Spies, Solicitor – Commercial Property

Exeter – 01392 285000    Newton Abbot – 01626 330127    Cullompton – 01884 33818