Commercial Property - Commercial Freehold Property
Before agreeing the sale or purchase of a freehold property there is a need to consider:
OWNERSHIP
Ask your lawyers to look at the deeds and ensure that the ownership position is clear. It is possible that a company may have changed its name, a partnership has changed left the deeds in retired partners’ names or a business may have its deeds in the name of the founder. Finding this out in advance and sorting out the title will save time and present the correct impression to a potential Buyer.
When buying it is essential to decide in whose name or which company the freehold assets are to be held and to consider a simple trust to confirm that a greater number of persons are equitably entitled to any rents or profits from the property.
PLANNING PERMISSION
If buying a property consider not only to what uses the property is immediately going to be put but also any potential uses that may arise from growth of the business. Where the proposed use requires planning permission have your lawyer make the contract conditional on the grant of a satisfactory planning permission.
When selling a property it may have been a business asset for a now redundant or old fashioned business so consider if prior to marketing any change of use of planning consent could derive a higher sale value.
Even in circumstances when the Buyer intends to use the property in the same way there is a need to check to see if there is a current planning permission authorising the present use. If not then an application for a certificate of lawful use will need to be made showing long user for more than 10 years.
Some properties will be either a Listed Building or located in a Conservation Area. Where this is the case additional planning applications need to be made and works will need to be carried out by skilled craftsmen using traditional materials which will add to any repair or renovation costs.
ENVIRONMENTAL ISSUES
The Environmental legislation attempts to make the polluter pay for any clean up required to land and buildings. A problem arises where the former polluting owner or occupier cannot be traced. This could be a deceased individual or a company that has been wound-up.
Where the polluter is not traceable the Environment Agency will look to the present landowner to carry out necessary clean-up works.
When buying a property an environmental search is carried out but this is a desk top survey based upon historical data and plans. If the report shows the likelihood of pollutants and contaminants it is possible to obtain insurance cover. This is only available where there is a risk of a claim not where a claim is certain.
Where a site is to be redeveloped then a soil test and trial bore holes are required prior to exchange of contracts and the Seller will need to give consent for such invasive surveys.
It is possible to obtain warranties from the Seller as to past user but this must always be weighed against the future ability of the Seller to pay for any clean-up works. A better solution is to hold back monies as retention to be released once the ground works and foundations are completed.
ACCESS
The fear of any landowner is to be “landlocked”, meaning that there is no way of getting to and from the public highway without crossing other land over which no rights of access exist.
Searches and enquiries are specifically aimed at checking this issue and their results need careful study. Where development of the property is been proposed enquiries of the Highway Authority are essential as they may require “visibility splays” giving sight lines over adjoining property to allow the additional traffic views down and up the public highway onto which the site leads.
SERVICES
It is always important to ask what services are connected to the mains. Answers can reveal; tanks for heating oil or LPG, sewage systems with tanks and pumping stations and even private water supplies. Having established which services are connected there is a need to check the routes of such services and where necessary the ability to enter neighbouring land to repair and replace pipes and cables. Sometime there are joint services to which the property owner has to pay a proportionate part of any repairs. Many commercial uses require a 3 Phase electricity supply or a larger gas supply pipe and the routes and ability to run new pipes and cables need to be checked.
COVENANTS
Where land is sold off as a part only, possibly many years previously the landowner may have entered into a covenant to do or not to do certain things. This may be to only use the property and any building erected upon it as a dwellinghouse. Many years later the Buyer may wish to change the use to offices. In such an example a release of the covenant would be required or the purchase of an indemnity policy to provide funds to pay off any claim if the person to whom a request for a release is not known
The views expressed are of a general nature only and are not intended to be used without prior consultation on a specific project.