Selling Property FAQs
What are heads of terms?
These are the terms of sale agreed between you and the buyer at the outset, including details such as the identity of the parties, the agreed price, any conditions to the sale and required time frames. Commercial property agents and solicitors can assist with negotiating the heads of terms.
I have agreed terms to sell a commercial property; what happens next?
Once terms have been agreed:
- the buyer may want to have a survey of the property carried out and may be required to do this if it is obtaining bank funding for the purchase
- the parties will each instruct their own solicitor to act for them
- you should collate as much information as you can about the property including copies of any planning permissions and paperwork such as fire risk assessments, electrical and gas safety reports. You will also need to report things like any disputes which have occurred in relation to the property and any insurance claims you may have made, to assist your solicitor in compiling the sales pack (see below)
- we will prepare a sales pack typically comprising:
- title information proving your ownership of the property
- industry-standard replies to enquiries about the property covering everything from disputes to asbestos, known as CPSEs
- sale contract
- we will also do the following:
- apply for any third-party consents that may be required to allow the sale to proceed
- liaise with the buyer’s solicitor and respond to any enquiries raised by them
- negotiate the sale contract
- deal with any additional, specific enquiries resulting from the buyer’s solicitor’s due diligence
- negotiate the transfer deed
- report to you throughout the matter
- once the buyer has carried out all of its conveyancing searches and is satisfied with the due diligence it and its lawyers have carried out on the property, the contract will be signed and exchanged. At this point, the parties will be legally bound to the transaction
- the transfer deed will be completed (and the property formally transferred to the buyer) on the completion date agreed in the contract or when any conditions to the contract have been satisfied. On the date of completion, you will need to vacate the property and hand it over to the buyer
- we will deal with the repayment of any existing charges secured on the property from the proceeds of sale and account to you for the balance
Timings and transaction documents will vary depending on the circumstances of the transaction, for example:
- auction sales are often quicker than private sales;
- sales, where the buyer is using cash, are more straightforward than those requiring funding;
- completion may depend on contractual conditions being satisfied, such as obtaining planning permission for the redevelopment;
In every case, we will clearly explain anticipated timeframes and potential delays throughout.
Some property sales are less straightforward and may require one of the parties to obtain planning permission or carry out works to the premises. There may be some other irregularity with the property or unusual circumstances relating to the sale. We do not just deal with standard contracts and documentation. All our documents are drafted on a bespoke basis and are tailored to meet the specific requirements of our clients, their property, and their transactions.
We know that you want your sale to proceed as smoothly and quickly as possible. We will actively manage the legal process.
Do I need an EPC to sell my property?
You must obtain an EPC before a building is marketed for sale or rent. Where an agent has been engaged to sell or to rent out a building, they must include the energy performance indicator from the EPC in all commercial media/marketing material produced for that building. Certain properties are exempt from the requirement to provide an EPC and we can consider this with you, if relevant.
Do I need to charge VAT on the sale price?
Generally, the sale of commercial property is exempt from VAT. There are certain exceptions including where the property is less than three years old or you have made an option to tax the property for VAT purposes with HMRC (sometimes called a VAT Election). If any of these exceptions apply, it would mean that you would normally need to charge VAT on the purchase price. If the property is let to tenants, the sale may be treated as a Transfer of a Going Concern meaning that no VAT is chargeable. We will consult with you and your tax advisers to ensure that the VAT position is established and dealt with appropriately in the contract.
What is a Transfer of a Going Concern?
A Transfer of a Going Concern (TOGC) is the sale of a business including assets which will be treated by HMRC as outside the scope of VAT and therefore no VAT will be payable if certain conditions are met.
How much are legal fees and how long will my sale take?
This depends on the specific requirements of each transaction in each case. For example, a contract to sell a property conditional upon the buyer obtaining planning permission for redevelopment is more complex and time-consuming to draft, negotiate and agree than an unconditional contract to sell a property immediately following exchange.
Similarly, a contract conditional on planning will involve a delay between exchange and completion whilst the buyer attempts to satisfy the conditions, whereas an unconditional contract might exchange and complete on the same day.
We will provide a detailed fee quote and estimated timeframe at the outset of the transaction and will keep you fully informed of any anticipated changes to those, throughout.
What other expenses will I have to pay aside from legal fees?
Typical expenses may include:
- commercial property agent’s fees (if you appoint them to assist in selling the property and/or negotiate of heads of terms)
- if third party consents are required, you may have to pay the third party’s legal and other fees
- redemption fees with your lender
- the cost of obtaining up to date title information for the property from the Land Registry
- the buyer may ask you to pay the cost of any insurance policies which are required if there are any title defects
At the outset of each transaction, we will provide an estimate of our fees and the likely expenses we will incur during the transaction.
Will I need to take advice from other professionals?
Yes. You should consult:
- a tax specialist to ensure that the proposed structure of the transaction is most efficient for your personal circumstances and to assess the tax consequences of the sale
- if the contract is going to be conditional on works being carried out or the buyer obtaining planning permission you may need specialist planning and construction advice to assist you in agreeing on the terms of any conditions with the buyer.