Is your commercial property paperwork in order?
When you sell a commercial property or agree a lease, there is a seemingly endless flow of paperwork. However it is important to keep on top of all the documents to make sure transactions go smoothly and to ensure your legal obligations are met.
Prepare documents in advance
If you leave ordering your paperwork until a property is advertised for sale or lease, you may lose out on interested parties. Buyers and tenants expect owners to have the relevant documents to hand and any undue delay could threaten the entire transaction.
Understandably, it takes some time for your solicitor to prepare the contract and title details, but wherever possible paperwork should be assembled ahead of time. The longer a transaction takes, the more likely it is that a buyer or tenant’s circumstances will change, or a sudden shock to the market will make them think again.
Some documents cannot be prepared by your solicitor. You need to obtain them yourself. Let’s consider what you are likely to need.
As the owner of commercial premises, you are legally obliged under The Control of Asbestos Regulations 2006 to ensure your premises have been properly surveyed for the presence of asbestos. If asbestos is identified, the report should contain a management plan for the hazard.
Although it is not always necessary to remove asbestos as soon as it is identified within a building, you must alert new owners or tenants of its presence in order to safeguard them and any workmen they may use from the risk of exposure and contamination.
Fire risk assessment
Fire safety is governed by the Regulatory Reform (Fire Safety) Order 2005, which places the emphasis on those in control of a building (employers, owners and occupiers) to assess risk and put appropriate precautions in place to prevent fire and manage it when it does occur.
You should carry out a risk assessment and keep a written record. A prospective tenant or purchaser will expect to see this document.
Electrical and gas safety checks
Electrical systems and equipment, as well as gas appliances should be checked regularly to ensure they are safe and fit for continued use. A prospective tenant or purchaser will wish to see the most recent report and may wish to confirm that any works involving electricity or gas have been carried out to a suitable standard and in accordance with current regulations.
Energy Performance Certificate (EPC)
An EPC shows how efficient your property is in terms of energy usage and it is required for commercial properties available for sale or lease. The certificate gives future occupants an indication of what their energy costs may be. You will need to engage a qualified EPC surveyor to carry out an inspection to prepare the EPC.
There is a regulatory requirement to inspect air conditioning systems regularly to assess energy efficiency and effectiveness. You will need to keep documentation from this inspection to include in the premises paperwork.
Health and safety file
If building works have been undertaken at the property, it may be that these were subject to the Construction (Design and Management) Regulations 2007, which requires that documents showing compliance should be available for inspection.
Planning permission and building regulation consent
Any prospective tenant or purchaser will want to confirm that appropriate planning consent and completion certificates are in place for any work on the property. While a local search will give some information about this, having the full documents available will help save time so the transaction is not held up while the council produces the relevant papers.
You will need to work with your solicitor to produce replies to a set of standard commercial property enquiries. This takes careful consideration, especially if you have owned the property for a long time. Giving false information on this form could have legal consequences, so it is important to be as accurate as possible.
If you plan to let your property, your tenant is likely to expect that you arrange the insurance and they pay the cost of the premiums. A prospective tenant will want to see documents showing the terms of the policy and the cost, so ensure you prepare this ahead of time.
This is a general guide to documents you might find helpful to prepare for a sale or lease of commercial property. It is not intended to be relied upon; you will need to consult a professional such as a lawyer or financial adviser to confirm the exact documents you will require.
Do you need insurance to protect your commercial property? Why not talk to Stride about your options?