In a recent blog I looked at common mistakes made by both landlords and tenants when entering into commercial property leases.
This time I’m going to highlight some of the legal problems people can get themselves into when buying a commercial property by overlooking some of the fundamentals of the purchase process.
Make sure you get a valuation
People often agree upon a price without having a surveyor tell them what the property is actually worth. This is particularly a concern where people are buying without a mortgage (as lenders will always get a valuation) and can mean that when the owner comes to sell or refinance the property it is not worth what they thought it was.
Get a survey done
Buyers often overlook the issue of getting a survey done. This identifies any potential defects with the building and means that they buy knowing the potential cost of remedying any problems. This can also give the buyer the ability to renegotiate the sale price.
Carry out the relevant searches
Where buyers are not purchasing with the benefit of a mortgage there is a temptation to cut costs and not undertake a full investigation into the property. Solicitors often undertake local authority searches, desk top environmental enquiries, drainage enquiries and chancel repair liability searches. These will often reveal whether or not there are any outstanding financial charges against the property, the potential risk of costs in the future, or adverse issues regarding rights to the property.
Check there are no restrictive covenants on the building
Buyers must ensure that the title to the property does not contain any restrictive covenants that may affect their use or intended use of the property. Checking the title deeds to your property will quickly reveal whether there is a valid restrictive covenant which affects the land. Restrictive covenants can be challenged of course, but this can be a lengthy legal process. Better to know at the outset if any covenants exist.
Ensure the relevant planning permissions are in place
It is important to check if there is requisite consent for the building or any alterations to the building. The absence of planning permission and/or building regulation approval could mean that works previously carried out on the building are structurally unsound or alternatively that consent was refused.
The local planning authority has wide ranging enforcement powers in the event of a breach of planning. Any absence of requisite consents should be referred to your surveyor and will need to be reported to any proposed lender for clearance to proceed.
For more advice on commercial property purchases, or any other property law matter, please contact Owen McKenna on 01772 258321 or Owen.McKenna@harrison-drury.com