Before the buyer and seller exchange contracts, it is important that both parties are perfectly satisfied with all the terms and conditions detailed within them.
A Heads of Terms (HOTS) will be put together, which is essentially a draft of the main contract, made before the legal work is done, so that both parties can negotiate and agree on the key terms.
During this process, if you are in doubt, seek professional advice from a solicitor. By this point, it is also vital that an accredited surveyor has assessed the property and made a full inspection.
If planning permission is a condition of the exchange, this has to have been granted by the local authority before the buyer signs on the dotted line.
Finally, the buyer needs to be certain they have raised the necessary amount of money in order to complete the deal. This will usually include a deposit which can vary between 10% and 20% of the property's value and will be required at an agreed time before the actual completion date.
Also, do not forget to arrange buildings and contents insurance to start on or before exchange of contracts.
Securing the property
In the UK, until contracts are exchanged, the buyer or seller can walk away from the deal with no personal consequence. The buyer may well have paid for a survey, a Land Registry Search and legal fees and will be left out of pocket, with no legal options.
If there is a chain, the seller can be in the same position if their buyer drops out and they are unable to proceed with their purchase.
To ensure mutual loyalty, a Lockout Agreement can be put into place before the contract is signed. This is a written contract between the buyer and seller, in which the seller will agree not to look for or accept any other offers on the property for a specific period of time (usually the average three months it takes between offer and completion).
This will allow the buyer to have time to seriously consider the transaction, take any necessary steps before signing the contract and raise the sufficient funds needed, whilst ensuring their future investment is secure.
This legal document (which is sometimes called an Exclusivity Agreement) does not, however, obligate either party to complete the deal. It is merely the purchase of a short protective period during which the seller is not allowed to negotiate with other parties.
Once any remaining balances are paid and the contract is signed, you have officially completed the contract. This whole process will usually take a month after the deal was struck, but the proper completion period will be set out in the HOTS.
It is time to give yourself a pat on the pack: you are officially an owner of commercial property. Following completion, you will need to:
Pay Stamp Duty Land Tax, a tax paid on the purchase or transfer of property or land in the UK, usually charged as a percentage of the amount paid.
Register with the Land Registry to confirm that you now own the property.
Let the business rates department of your local council know about your new occupation.
Register your property for health and safety regulations.