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Commercial Businesses

What Sellers need to know before they sell a commercial property.  You first of all need to get some information together. When you have a business with property for sale (such as a cafe or restaurant for sale), aim for most of the following:

  • Accounts for the last three years. Audited if possible.
  • A copy of your title. If leasehold, this means a copy of the lease as well as the freehold. Official copies of any registered title.
  • Copies of any agreements that relate to the business. Hire purchase, leasing etc.
  • A full list of all fixtures and fittings included in the sale.
  • Details of all employees, including a copy of their contracts.
  • Copies of all utility bills for the last 6 months.
  • Details of all dealings with the leasehold interest eg consent for alterations from the Landlord.
  • Rent receipts for the last 6 months.
  • Any reports you have on the property. Do you have an asbestos survey? Do you have a fire inspection report? You will need a EPC.

Once you have this information together then you need an agent to market the property for you. We can recommend the right one for you, so call us if you would like a recommendation. At this stage you may also need to produce surveys and reports.

It is also likely that you will have to answer detailed questions about your use of the property. Commercial Property Standard Enquiries can run to 40 pages and then there may be 20 pages of additional enquiries. It is important that you deal fully with all these enquiries as you may be guilty of misrepresentation if you do not reveal something that they have specifically asked you about.

Once all this information has been obtained, a contract will be drafted. If there is a lease, you will need the Landlord’s consent to assign. You will probably have to provide an undertaking to pay their legal costs so be prepared to supply enough cash for this and references from your purchaser to give to the Landlord. You may have to enter into an AGA – an authorised guarantee agreement. This is when you promise to the Landlord that you will pay the rent if your buyer does not.

The quicker you supply this information, then the quicker the matter can proceed. However bear in mind that you cannot complete without the Landlord’s consent and they may not be prepared to work to your timetable. Factor this in when agreeing a completion date.