Many people will agree that purchasing a commercial or industrial property is a significant step in their lives as it may mark the start of their business or their investment. It is, therefore, a decision that needs careful consideration. It doesn’t matter if you are the one buying the property or selling one; either way, you are going to need the assistance of experts on commercial law, including an accountant, a finance broker, and a solicitor.
To help you understand what is involved in the buying or selling of a commercial or industrial property, our seasoned commercial lawyers at GLG Legal prepared a quick guide for you:
The Preparation of the Contract
An experienced solicitor who is knowledgeable in the area of commercial conveyancing will prepare the contract. It depends on the buyer and seller’s decision which party’s solicitor will take care of the contract. At GLG Legal, we are capable of presenting the first draft to our clients within 24 hours of getting the request and specific instructions.
The REIQ (Real Estate Institute of Queensland) has a ready REIQ Commercial Land and Buildings Contract, which comprises:
(i) Items Schedule, which is the body of the contract with specific details about the property
(ii) Standard Conditions, which are 34 in number, all applying to the contract unless indicated as excluded in the special condition section
(iii) Special Conditions which reflects all the negotiations between buyer and seller as it applies to the property
This contract is often used for commercial, farming, industrial, and retail properties.
It is crucial that you read and thoroughly understand all the standard conditions to see if there are any changes that you want to include in the special conditions clause. Remember that unless you make changes, you will be legally bound to what’s indicated in the standard conditions.
The Cooling Off Period
Unlike Queensland contracts for house and residential lot contracts, which have a 5-day cooling-off period, there’s none for both commercial and land contracts.
What Name to Put as Buyer Entity
You have several choices when it comes to the name you’ll use for the property:
· Your name
· Joint names if it’s a partnership
· Company name
· Your name as a trustee (if for a discretionary family trust, unit trust, or superannuation fund)
· Company name as a trustee
· A combination of any of the above
We can’t stress enough the importance of consulting with your lawyer and accountant before you sign any contract when you’re buying a commercial property. There’s nothing you can do after you sign a contract because what’s indicated there is final, so get advice first. Changes to a signed contract require the cooperation of both parties and incur additional legal costs. Also, changing the buyer entity in the contract would probably need another transfer of property as there’s no telling if the seller will agree to vary the buyer entity.
Make sure you consider the tax implications when you are deciding on the name to put on the contract, keeping in mind that a company and an individual are taxed differently. Your financial advisor would be able to provide you with helpful insights regarding this.
Buying or selling a commercial property is indeed a huge decision. It’s not a situation that you could rush or treat carelessly. With the help of reliable commercial contract lawyers, you would be able to get the fairest possible deal and ensure there are no issues with the contract.GLG Legal is an ambitious, innovative, commercial, and property law practice based in Brisbane that provides its clients real-world solutions to meet their commercial and property needs. You can call our expert commercial lawyers at 0731619555 for more information.