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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 formal letters constitute the terms of 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 seller and any express conditions of the sale.

The missives 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 missives are 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) and the registration dues. 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.

 Develop

Our specialist team understand the importance of funding in realising your commercial property transaction. As such, we offer legal advice for borrowers and lenders on aspects of commercial property investment including:

• Negotiating and drafting standard securities
• Renewing or transferring securities
• Drafting funding applications

A standard security (legal mortgage) can be granted over land and buildings. The obligations of a loan can be inserted into the standard security itself or in another deed. A set of standard conditions has been created by Parliament, which are automatically incorporated into every standard security. The standard conditions relate to terms that include insurance, repair and prohibiting the grant of leases and sub-leases without the lender’s consent. However, these conditions may be amended by the security deed itself.

If the borrower has breached the conditions of the standard security, for example by failing to make repayments, then the lender is entitled to serve a notice of default or calling-up and enforce their remedies. Remedies include forced sale or the right to receive rents.

A commercial lease is a contract between an owner and occupier governing the rental of commercial premises. It establishes the rights and obligations owed by both the landlord and the tenant and the agreed terms of renting such property such as repair, duration, rent, rent review, use, ability to assign (transfer) the tenant’s interest and alterations. At MBM Commercial, our commercial property lawyers are committed to offering commercially minded assistance, specific to each transaction, in areas such as:

• Drafting and negotiating commercial leases
• Transfer of tenant’s interests in commercial leases
• Sub-letting of commercial leases
• Lease disputes
• Termination of leases

We also have extensive and long-standing experience in a wide range of property disputes. We have provided advice on:

• Disputes regarding dilapidations
• Boundary disputes and disputes regarding the interpretation of title conditions and access rights.
• Disputes regarding commercial leases and licences to occupy, acting for both landlords and tenants
• Disputes regarding commercial rates and utilities
• Planning appeals
• Rates appeals
• Disputes in relation to development
• Disputes in relation to Sites of Special Scientific Interest
• Lending security, including advice to commercial and residential lenders on security enforcement
• Disputes in relation to insolvency of tenants & landlords