The process of purchasing commercial property can be broken down into 5 stages:
" Pre-contract stage
This is when most of the work is done. The seller will usually prepare a draft contract, giving the terms on which they are prepared to sell the property. They need to prove that they own the land that they are trying to sell and give the exact description and extent of what they own. It is the buyer's responsibility to ensure that the land they are buying has no defects. It is usually the buyer who has to apply for searches to be made on the property and they have to ensure that there are sufficient funds in place to purchase the property, normally with a commercial mortgage. Once all the information has been gathered and assessed, and the contract agreed between the parties, a final contract will be prepared for the signatures of the buyer and seller.
" Exchange of contracts
Before this stage any party can pull out without risk of penalty. However, once the contracts have been exchanged, a party cannot pull out without making themselves liable for damages for breach of contract. At this point there will usually be a deposit payable by the buyer. For commercial properties commercial mortgage companies ask for about 20-30% of the purchase price.
" Post contract stage
If the buyer is using a commercial mortgage to finance the sale, the lender must make preparations for it at this stage. For example, the same types of checks must be made to assess the ownership of the property as were made by the buyer's solicitor, and credit checks must be made against the buyer. Preparations also need to be made concerning any mortgage that the seller has on the property, as this will need to be paid off or transferred.
" Completion
At completion the buyer will hand over the money in return for the deeds to the property. The transfer of money can be done with a bank transfer. Once this has been confirmed the keys will be released to the buyer and the deeds sent to the buyer's solicitor.
" Post completion
The seller will usually have to confirm the discharge of any mortgage over the property. Once this has been done the receipt will need to be transferred to the buyer to be sent to HM Land Registry to prove that it has been discharged.
At Michael Alexander we can help you arrange commercial finance for you to buy a commercial property of your choice. Call us now on 0845 2 605 506.
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Commercial Mortgages and Professional Mortgage Advice from Michael J Alexander Group
Finding a commercial mortgage which suits your needs is just one of the hurdles in the process of purchasing a commercial property
The processes involved in the purchase of commercial and domestic properties are basically the same. The main difference is that greater sums of money will generally be involved in commercial transactions.
