Since the sale or purchase of commercial property is typically of significant financial or operational value, it is important to limit risk and receive expert advice in transactions relating to:
- Medical facilities, retail units, pubs, clubs, hotels, restaurants, residential developments and offices spaces
- Land for development
- Purchase of income deriving assets for investment purposes
- Land required for renewable energy projects
In Scotland, contracts for purchase or sale of commercial land or structures must be formalised in writing. Contracts for purchase and sale of property usually consist of offers and acceptance, which are conducted through the exchange of letters between solicitors known as ‘missives’. These exchanges constitute the terms in the commercial property contract and contain the essential features such as the price, details of the property and identity of the parties involved. The missives should also include further provisions such as warranties by the Vendor and any express conditions of the sale.
The agreement will normally also include clauses that apply qualified protections to either party, for example, the sale being subject to the purchaser being satisfied with a survey, receiving planning consent from the Council, an environmental audit, valuation/funding, licensing or even the sale of another property. This allows the conditions of the deal to be subject to a controlled timescale or standard and allows termination if unsatisfactory. However, should the conditions prove satisfactory, they become legally binding
Sometimes the contract is structured as an “option” allowing the purchaser to have a right to acquire the asset on certain circumstances being met. Similarly, in development sales, arrangements are often put in place to allow the seller to share in future uplifts in the value (or overage)
At completion of a sale, the purchaser will pay the purchase price in exchange for the conveyance of the property. In addition to the purchase price, the purchaser will be liable for any tax due on the transaction in order for the property to be registered in the Land Register of Scotland (i.e. Land and Buildings Transaction Tax – LBTT). Until registration has taken place, the purchaser has only a personal right against the seller and, if the seller is liquidated or becomes insolvent before registration, the purchaser will rank only as an ordinary creditor for return of their payment. Swift registration of title is, therefore, key.
Contact our Commercial Property Lawyers in Edinburgh, Scotland
At MBM Commercial, our specialist commercial property lawyers are ready to guide you through the various stages of your commercial property transaction, from initial investigations and property searches to completion of sales and purchases. Please contact us on 0845 345 5004.