What are the benefits of ensuring that commercial property is ready for sale at the outset?

When getting your commercial property ready for sale, there are many key steps you need to take.

In this article, Commercial Property expert Ben Cobb covers the benefits of ensuring your commercial property is ready for sale and what steps you should take.

What are the benefits of ensuring that commercial property is ready for sale at the outset? 

It is important to ensure a commercial property is prepared for sale at the outset for multiple reasons, including:

1. To reduce any delay in the sale process, which would also result in more serious buyers being interested and a reduction in financial burdens required whilst having the property on the market such as insurance, maintenance and taxes.
2. Being more organised at the outset would help mitigate any surprises during the due diligence process.
3. It would be maintained as well-presented, clean & tidy which would result in higher offers and would also provide you with a stronger negotiating position
4. It would help attract a larger pool of buyers due to the reduced delay and would also help attract more cautious buyers due to the reduced risk perception.
5. This would also reduce the likelihood of a sale falling through due to unresolved issues discovered late on in the process.

What steps should be taken to prepare my commercial property for sale?

To prepare a commercial property for sale, the following steps should be taken to make sure the sale runs smoothly and without delay.

Preparing all legal documentation in readiness.

 This would include making sure the title deeds, any leases, planning permissions & building regs are all available and also making sure any legal obligations like an EPCs, Asbestos surveys and Fire risk assessments are up to date and also available for inspection,

Preparing commercial property for sale

Once legal documents have been obtained, it’s sensible to physically prepare the commercial property for the sale. This would involve repairing any issues, ensuring utilities work and bringing the property up to a reasonable standard of tidiness.

Review the title

Following the above preparation, the next step would be to review the title and make sure that any obligations have been complied with. This will ensure a smooth and efficient transaction with minimal delays.

What documents do you require when selling a commercial property?

There are several documents required when selling a commercial property. These include:

1. Proof of ownership (Name on the title deeds etc…)
2. Copies of any leases on the Property
3. The Asbestos Report (where relevant), Fire Risk Assessment and EPCs as previously mentioned.
4. Electrical Test Certificate, Gas Test Certificate, Air conditioning servicing Certificate, and any other available test certificates where applicable.
5. The Health and Safety file
6. Copies of any insurance policies for the property
7. Planning permission and building regulation relevant to the property
8. A copy of your VAT election notice (if VAT is charged on the property)

If any of these documents aren’t in your possession, they should be obtained before starting the process of selling the property.

What are the potential pitfalls of selling commercial property?

Selling a commercial property can bring many hurdles which will need to be dealt with to ensure a smooth sale. These include:

Negotiating with the buyer. This could result in a delayed back and forth between the two parties especially where the steps mentioned previously to prepare a property for sale aren’t met.

Where due diligence is involved, the seller will be required to answer a multitude of questions, specifically the CPSEs (commercial property standard enquiries). This can be seen as a hurdle and where there is a lack of preparation on the seller’s side, it is often met with delay and surprise issues.

Dealing with any restrictive covenants on the title that may cause a problem for the buyer or have been breached during your ownership. This can be prevented/mitigated by ensuring your property is ready for sale at the outset.

Another pitfall when selling a commercial property may occur where a mortgage is involved on the seller’s side. This is because consent from the lender will likely be required before selling the property. This brings me onto our next question regarding third-parties.

Which third-parties should be considered?

As mentioned above, lenders are a third-party which will need to be considered in a lot of commercial property sales from both the seller and buyer’s end. As a seller with a mortgage, you may be required to obtain their consent to sell the property.

An indemnity insurance company may need to be considered where there is a defect in the title which needs covering.

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If you have any queries following this article, please don’t hesitate to get in touch with our bright Commercial Property team by calling 01202 499255 or by filling in the form.