The commercial conveyancing process entails the transfer of commercial property from its seller to the buyer through different steps. It typically starts with the contract of sale’s negotiation to the official registration of the transfer.
Most of these commercial transactions are handled by conveyancing lawyers who expedite the process and help you minimise the financial risks. Although many individuals are tempted to skip hiring professionals to save on costs, we recommend that you still employ them to avoid facing the severe consequences of not having the proper legal guidance.
Read this article carefully to learn about the elements of the commercial conveyancing process.
The Six Steps
Commercial conveyancing is defined as the legal process of transferring the ownership of a property from one person to another. Its six phases are the following:
- Execution of the contract of sale
- Review of searches and removal of conditions
- Financing
- Preparation of figures
- Settlement of figures
- Fulfilment of post-settlement issues
Contract of Sale
The seller’s solicitor or real estate agent must first prepare the property’s contract of sale. This sets the description of the commercial property, prices, warranties, and other relevant terms and conditions. Then, the buyer’s solicitor will review this contract of sale and negotiate desired changes before both parties sign. Once this is accomplished, the buyer will pay the deposit. This process is called the “exchange of contracts.”
During the period known as “cooling off,” a buyer may withdraw from the contract and unconditionally forfeit 0.25 per cent of the property’s purchase price without suffering legal penalties. It is also typical for sellers to ask buyers to issue a Section 66W certificate to shorten or entirely skip the “cooling off” period.
This is the standard rule in New South Wales but take note that not all states practice this period. We recommend consulting with your solicitor about this first.
Searches
Contracts are contingent upon the satisfaction of specific conditions on property financing and searches. Typically handled by the buyer, searches include a title, zoning, strata, and historical search. Your obligations as a buyer are not fixed until these conditions are fulfilled.
Financing
If the project will be financed, the buyer will first arrange for commercial financing at the beginning of the conveyancing process. Specific law firms can expedite this process because of their affiliations, so make sure you work with a firm that diverse lenders accredit.
Pre-Settlement Matters
Any commercial property buyer has the right to conduct a pre-settlement inspection to be arranged by their agent. The seller is obliged to make sure the premises are clean and empty at the time of the settlement.
If a buyer is not satisfied with the property’s condition at the time, they can delay the deposit of the settlement until such matters are resolved. Keep in mind, though, that neither party can terminate the contract right away.
The final settlement figures may not be available until the day of the settlement, but both parties’ solicitors should be updated on costs throughout the transaction. Before the actual settlement, the buyer will prepare the settlement figures and finalise the cheque details.
Settlement and Post-Settlement Matters
During the settlement, the buyer, seller, and lender will coordinate the legal documents and finalise the payment of the purchase price. In New South Wales, the insurance risk will also be passed from the seller to the buyer upon settlement or possession.
Immediately after the settlement, keys, access devices, and security codes will be transferred to the commercial property buyer. Relevant authorities must be notified of this change in ownership; this last step of the commercial conveyancing process is handled by the purchaser’s lending institution.
Conclusion
To ensure a smooth transfer of commercial property, we recommend hiring a conveyancing solicitor. Their expertise and experience in commercial property law will make the transaction hassle-free and minimise financial risks. They can also provide legal advice that may be necessary when issues arise during conveyancing.
If you need commercial conveyancing lawyers, turn to GLG Legal. We are an ambitious, innovative commercial and property law practice based in Brisbane that provides clients with real-world solutions to meet their commercial and property needs. Get in touch with our team today.
