11 months ago

The legal process of transferring business ownership

Conveyancing of commercial property is a serious operation that requires the change of ownership of a commercial property.
It is an important procedure to make sure that all and sundry legal requirements or conditions are fulfilled, and that the transaction is a successful one.
The information on how the commercial property conveyancing process works means that the buyers and sellers are able to go through the strings of the process with ease.

1. Initial Agreement and Instructions

The commercial property conveyancing is the legal procedure that starts at the time of the contract between the buyer and the seller.
After the negotiated terms of the sale have been arrived at, the buyer enters into contract with the seller and both hired conveyancers or solicitors in the business of commercial real estate.
This is normally done by the buyer’s conveyancer who undertakes an initial search of the property and seeks instructions from the client as to details of the transaction and any special terms of settlement.

2. Drafting the Contract

After the conveyancer has received the necessary instructions in the case, he or she prepares a contract of sale.
They include the terms of the transaction such as the price at which the asset is sold, the amount of deposits which has to be paid, the date on completion of the transaction and other conditions which may apply to the parties to the transaction.
Such information as the legal title of the property, existing leases, encumbrances and restrictions are part of the contents of the contract.
The latter is forwarded to the conveyancer of the seller to do a scan and see of there is any anomaly there.
It is also possible for the two parties to emotionally and theoretically bargain until they come up with a common ground.
In the last stage of the contract, the contract document is signed by both the parties and a legal relationship is formed.

3. Property Searches and Due Diligence

Indeed, it could be argued that property searches and due diligence is one of the most sensitive areas of conveyancing in commercial property.
These checks will be performed by the buyer’s conveyancer in order to expose any problems that may exist as to the property or the transaction.
These searches typically include:

· Title Search: To ensure the seller is the rightful owner of the property as well as verifying for any encumbrances such as mortgage, liens among others.
· Local Authority Search: To check for any planning permission, the zoning law and any other development that may occur in the area of the property, in order to buy it.
· Environmental Search: To discover any environmental obstacles in the property for instance, contamination or a possibility of floods hence degrading the value of the property.
· Commercial Property Enquiries: To get information on the current use of the property, current leases, service charges and any existing litigations.
These searches are necessary for the purpose of discovering any legal or financial problems that may be linked with the property so that the buyer is aware of.

4. Exchange of Contracts

After some time, the intended acquiring party and the vendor move to carry out their due diligence and when this is completed to the satisfaction of the two parties, the conveyancers will then facilitate the exchange of contracts.
At this stage, deposit is made by the buyer to the seller, which is usually 10% down from the total amount of the transaction and the contracts are exchanged.
This step in the transaction process brings it to legal requirement, and both the buyer, and the seller have to go through with the sale.
If one of the parties fails to perform the contract after both parties have signed the exchange of contracts they risk severe contractual penalties.

5. Completion

Closing or conveyancing is the last aspect of the commercial property conveyancing.
In the buyer’s conveyancer’s account there is a standing instruction that after completion the balance of the purchase price be paid to the sellers conveyancer.
In return the seller relinguishes the keys of the property as well as the legal documents that will enable change of ownership of the property.
The conveyancer that represents the buyer doesn’t complete the process without presenting the transfer in the Land Registry, where their client takes the position of the legal owner of the house.
Finally extra charges such as stamp duty or registration fees and any other charges are also paid at this point.

6. Post-Completion

Following the completion, the conveyancer issues the buyer with a completion statement that includes all the financial activities of the buyer in relation to the purchase.
The buyer’s conveyancer shall also make sure that issues of post-completion are dealt with including serving of notices on tenants where applicable.

Conclusion

Conveyancing of commercial property is a complex and technical affair that needs to be undertook professionally to ensure that the process is successful.
Due to the above procedure of legal formalities, the buyers and sellers will be in a position to devise on the legal procedures that are likely to be encountered and thus enable a more safe commercial property transaction to be undertaken.
Hiring a qualified conveyancer is significant to consider because of the legal complexities and the tendency of the difficulty of the process to become overwhelming.