We’re aware we’re making it sound like Strictly Come Dancing come to life…well, it’s actually kind of in a similar ballpark. Or should we say dance hall? Commercial conveyancing has nothing to do with shimmying your way to the top but rather preparation for a slightly lengthy process to gain the property of your wildest dreams.
What’s the Difference Between Residential and Commercial Conveyancing?
Residential conveyancing is for the place we call home, whereas commercial conveyancing deals with properties used for business purposes. Commercial property can be more complex as a result of tenants occupying the properties. Meaning it usually takes longer due to the extensive process, which we will get on to.
Properties can be freehold or leasehold. Freehold is the absolute ownership of property and the land it is on. Leasehold means leasing from the freeholder. It gives you the right to use the property for a fixed amount of time. These can last anywhere from 8 to 125 years, BUT can be extended to 999 years!
Fees for Commercial Conveyancing
The step everyone tries to miss, but would score you a big, fat zero from Craig Revel-Horwood if you did. So grab your partner, it’s time to tango.
A substantial chunk of money, other than for the purchase itself, goes towards legal fees. The actual price of conveyancing is completely dependent on the property price and the complexity of the transaction (it’s definitely worth it though). You’re probably dreading the idea of how much to pay, right?
Sorry to disappoint but there are, in fact, more fees! As well as being conveyancers, we will be your shoulder to cry on once you’ve read this list. These next fees are known as disbursements. They are paid by the conveyancer on your behalf, but (again I’m sorry) you will have to reimburse them for this. Examples of these are:
- ID Verification – check you are the real you, we can’t just take it for face value…literally!
- ID and Bankruptcy Search – just to check the purchaser is not on the verge of bankruptcy or already there.
- Property searches – These are explained in the section below.
- Transfer Fee – it is a fee payable in connection with future transfers of title to real property (AKA the physical thing!).
- VAT – I’m guessing you can figure this one out?
- Stamp Duty Land Tax – a tax paid by the purchaser of the land or property to His Majesty’s Revenue and Customs.
- Land Registry fees – This is a mandatory fee to register change of ownership on a property.
We did warn you, so grab a cuppa and settle in because now fees are out of the way, the fun stuff starts!
Searches are done to avoid buying property with issues unknown to you. There are 3 main types:
- Local Search: look at the property and check the regulations and planning documents, and check any land charges.
- Drainage and Water Check: check the property is connected to the public water supply and drainage systems. You’ll need this to rehydrate after sweating about saving for the fees, phew!
- Environmental Search: information on whether the property is likely to flood or built on landfill sites; no one wants a smelly property.
Other searches depend on where the property actually is located. These searches include coal and mining check, or canals and river trusts – get practicing your Riverdance or is that a different thing?
Time to Dance the Seller’s Samba…
From a seller’s point of view, the conveyancing process begins once the property is put on the market. The seller is responsible for a wide range of things, these are listed in the following steps:
- Completing the Commercial Property Standard Enquiries (CPSE) form,
- Confirming what is included in the sale with the buyer’s conveyancer,
- Drawing up the sales contract,
- Approve the Transfer Deed from the buyer’s solicitor,
- Negotiate the price and completion date with the buyer’s conveyancer on behalf of the seller,
- Exchange the contracts,
- Arrange a date for the keys to be collected – I’m sure you’d agree when I say I’d give this part a 10 if I was Darcey Bussell.
Time for the seller’s big finale! The conveyancer will use the purchase funds to pay off the rest of the mortgage and then deduct their fees, and finally transfer the remaining amount back to the seller. Our top tip would be use those funds wisely and treat yourself to some wine and kick ball change back and relax.
Cha Cha Cha-ing Your Way Around the CPSE Form
These are less technical than a cha cha, so probably best described as a cha cha slide. I’m sure your conveyancer would disagree…
These are CPSE’s that need to be completed by the seller. There are a wide variety of forms that are completely dependent on different things:
- CPSE 1 – Covers commercial property transactions; freehold or leasehold, vacant or tenanted. The other forms are for extra enquiries:
- CPSE 2 – if the property is sold subject to commercial tenancies. Simply meaning, stay put until the sale is 100% complete, then feel free to slide on out.
- CPSE 3 – If a leasehold is being granted for the property.
- CPSE 4 – If the property is being sold leasehold.
- CPSE 5 – When the lease is being surrendered. When the tenant’s interest is going back to the landlord.
These forms are intense to say the least, so in the words of DJ Casper get ready to “get funky”. Sorry no, I meant “get comfy”! Just a few examples of what the form includes:
- Details of rights and easements.
- Details of the physical condition of the property, including any structural defects.
- Who owns boundaries around the property.
And so on…
Bunny Hopping Your Way Through Conveyancing for the Buyer
No, it’s not as cute or simple as the headlines insinuates. It’s more on the complexity level of the Boston Waltz. It’s technical and enduring; we hope you have good stamina, and you should be praying your conveyancer does too!
The conveyancer’s duties include:
- Investigating the title – who owns it? No, we’re not asking, just explaining.
- Arranging the searches to take place – pop quiz: list those searches! Don’t worry you won’t get in trouble for forgetting, only because we’re not there to correct you…
- Liaising with the seller’s conveyancer, and, you guess it, more negotiating!
- Make enquiries on the property and about the CPSE form (s).
- Ensure all finances are in tip toe shape – just a little ballet humour!
- Arrange the contract exchange and transfer of funds on completion day.
- Pay the Stamp Duty.
- Register the buyer and the new owner on the Land Registry.
We would recommend for the buyer or seller to now relax and crack open a bottle of wine, but I would personally reward yourself the same way after reading this! It’s a loooooong process but I hope these quicksteps (get it?) really help to give you an understanding of commercial conveyancing. Just know that Newport Land and Law NEVER put Baby in the corner.