Commercial conveyancing is the legal work that transfers ownership or a leasehold of land and property that is used for business. You will need to enlist a conveyancer whether you are the buyer or the seller of a commercial property.
Commercial conveyancing is like residential conveyancing in that it transfers ownership of property from one person to another. That said, there are some important differences to be aware of. These include the complexity of the process, especially if tenants are involved. Additionally, commercial conveyancing can often take longer to complete.
What is the Difference Between Commercial and Residential Conveyancing?
Whereas residential conveyancing is for residential homes, commercial conveyancing deals with properties used for business purposes.
Commercial conveyancing often takes longer due to the extensive legal investigations required. Also keep in mind that in general, the larger the property, the longer the process is likely to take.
Commercial property can also be more complex than a residential transaction. This is in part due to the fact that commercial properties are often occupied by tenants. The rights of these tenants must be taken into account by both the seller and the buyer.
The paperwork will also be different, as more documents are required for commercial property. The buyer’s conveyancer will want to see details of the Fire Risk assessment for the property. They will also need details of current business rates.
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Common Instances of Commercial Conveyancing
Commercial properties include but are not limited to:
Retail units
Restaurants and bars
Offices and warehouses
Industrial sites
Land for development
Freehold vs. Leasehold
Commercial properties will be sold either freehold or leasehold. What does freehold mean when buying a house? Freehold is the absolute ownership of both the property and the land it stands on. The ownership remains in place until you decide to sell. There are many steps and costs involved with buying the freehold.
Leasehold means leasing from the freeholder for the right to use the property for a fixed period of time. This means you won’t own the property outright. The freeholder or landlord will continue to own the property and the land it is built on. Leases typically last between 99 to 125 years but can extend the lease for up to 999 years.
Commercial Conveyancing Fees
The cost of your conveyancing will depend on the cost of the property and how complex the transaction is. The biggest expense is the legal costs. This is the fee you pay your conveyancer for the work they do during the transactions. This is generally between 0.5% to 1.25% of the value of the transaction.
Conveyancing fees will also include disbursements. These are the fees paid by your conveyancer on your behalf, for which you will need to reimburse them. They include:
Land registry fees
Property searches
ID verification
ID and Bankruptcy search
VAT
Transfer fee
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Commercial Conveyancing for Sellers
The conveyancing process begins for sellers once the premises are put on the market. A seller’s conveyancer will be responsible for:
Ensuring the seller has completed for CPSE form
Confirming what is included in the sale, including fixtures and fittings, with the buyer’s conveyancer
Drawing up the sale contract
Liaise with the buyer’s conveyancer and negotiate the price and completion date on the seller’s behalf
Exchange contracts
Arrange for keys to be collected
Approve the Transfer Deed from the buyer’s solicitor
Once the sale is complete, the seller’s conveyancer will use the funds of the sale to pay off any outstanding mortgage. They will then deduct their fees, transferring the remaining amount to the seller.
What is a Commercial Property Standard Enquiries (CPSE) Form?
The CPSEs are pre-contract forms that must be completed by the seller. Introduced in October 2002, they aim to speed up commercial property transactions.
Form CPSE 1 will cover all commercial property transactions. This includes freehold or leasehold, vacant or tenanted. Extra enquiries are made in the form of:
CPSE 2 - if the property is sold subject to commercial tenancies.
CPSE 2 - where a leasehold for the property is being granted
CPSE 4 - if the property is being sold leasehold
CPSE 5 - when the lease is being surrendered
Enquiries Within CPSEs
The CPSEs include a comprehensive set of enquiries about the property in question. These include:
Who owns the boundaries around the property and any maintenance that has taken place on them
Any notices regarding the Party Wall Act
Details of rights and easements
Details of the physical condition of the property and if there are any structural defects
Whether asbestos is present on the property
Any extensions or building works that have been carried out in the last 12 years
A list of contents that are being removed from the properties
Details of utilities and services
Details of the Fire Risk Assessment for the property
Details of current business rates
Any insurance claims against the property and the existing insurance policy
VAT number and any group registration details
Sellers must have warranties, planning consent, and building control approvals for work on the property. They will also be required to include a copy of the Energy Performance Certificates (EPC).
Sellers may wish to consult their accountant to complete any financial aspects of the CPSE forms.
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Commercial Conveyancing for Buyers
As the buyer of a commercial property, your conveyancer will be responsible for:
Investigate 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
Making any enquiries regarding the property and the details found in the CPSE form
Ensuring all finances are in order
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 is a Commercial Lease?
A commercial lease is an agreement for property or land that is leased for business purposes. This means the person who holds the lease doesn’t own the property in question.
Many commercial properties are occupied by tenants with a lease. This means anyone buying or selling the property must take into account the rights of the leaseholders. The leaseholder is a tenant who pays rent and has the right to occupy the land or property for an agreed period of time.
Finding a Conveyancer
At Compare My Move, we can connect you with up to 6 conveyancers to save you up to 70% on your conveyancing costs. All our conveyancing partners have passed our strict verification process for your peace of mind. This means they are all regulated by either the SRA, CLC, LSS, LSNI or CILEx.
Need a Surveyor?
Once you've found a conveyancer, you soon might need the help of a RICS property surveyor. Simply fill in our integrated conveyancing and surveying comparison form to get connected today.
You can compare companies through our integrated conveyancing and surveying form by filling out a few extra steps. We will then connect you with local conveyancers and surveyors to save on the whole process.
