Purchasing property of any kind is confusing, but this can be especially true when it comes to purchasing commercial property. The process of commercial property conveyancing is also complicated with many contingencies, but you can use this guide to understand the six key steps involved in the entire process from beginning to end.
1. Negotiating and Signing the Sales Contract
The first step of business conveyancing is finding a property and negotiating an initial contract. Once a buyer finds a commercial property that suits their needs and that they want to purchase, their representative and the seller’s representative negotiate the sales price (based on the price at which the property was initially listed) and the other basic terms of the sale.
The seller’s representative draws up a contract of sale, the buyer’s agent reviews and approves, and the buyer pays the deposit.
Sometimes, a cooling-off period follows in which the buyer can withdraw from the contract without legal penalty, though they will forfeit some of the deposit. That said, many do not include this deposit as part of the conveyancing fees in Melbourne since it usually will eventually be put toward the purchase of the property itself (which means it is not a fee but part of the purchase price).
2. Searches and Removing Conditions
In the contract that was signed in the first phase, certain conditions were put in place. Usually, this includes the buyer securing financing in order to purchase the property (see below). Other conditions might also include changes or improvements the seller indicated they would make.
The most important part of this phase of commercial property conveyancing, though, is the searches. These include title searches, zoning searches, and sometimes strata search and historical search. That way, there are no surprises down the line for either party.
At least for the buyer, this is often the most anxiety-producing and complicated step in commercial property conveyancing. Though they were almost certainly pre-approved for a loan, now that the property has been found, they must formally go through the application process and be approved for the property itself. It can take some time, and some law firms have affiliations that can save valuable time. Consider this before hiring a firm.
Before the business conveyancing is finalised, there are usually a number of small (or sometimes larger) items for the seller to settle. In addition, the buyer should arrange a thorough inspection of the property. Sometimes the inspection will reveal unseen issues or repairs that are needed, and the seller may be obligated to reconcile those before the property is officially conveyed.
Neither party has the right to walk away from the contract during this phase completely, though a breakdown in these terms and negotiations could kill the deal.
The settlement phase is when the commercial property conveyancing legally occurs, and ownership is transferred from the seller to the buyer. It is also the point when all necessary conveyancing fees and other relevant jurisdictions must be paid.
The settlement is attended by the seller and buyer and their representatives or attorneys, and typically also someone from the buyer’s mortgage lending firm. At the end of the settlement, the seller takes ownership of the property.
Many people may assume that the process is completed on the day of settlement, since that is when the bulk of the money is paid and ownership is conveyed, but the process keeps going for a period of time afterward.
The buyer’s and seller’s solicitors may both be obligated to file various kinds of paperwork or communicate with any number of government agencies to register the sale and other matters. In addition, they are there to assist with any lingering issues related to the sale.
Your Solicitor Matters
The person or firm you choose to represent you through the commercial property conveyancing process is very important, whether you are selling or buying the property. For the seller, a bad solicitor could ruin a sale, costing money as well as time and stress.
For the buyer, having a knowledgeable and experienced conveyancer protects one of the largest investments that you will make in your entire life. Be sure to make this decision based on your own research and needs. You will be glad that you did when your business is up and running in your new property.