May 20, 2022
A property is often an integral asset in a transaction as it will be a fundamental part of any business.
Preparation and a review of the property information is key as it will identify early on in the transaction if there are any gaps or potential issues in the information you hold about your property.
We have come up with some key things you can prepare early on that will increase the likelihood that the transaction runs smoothly:
CPSEs:
A good place to start will be with the Commercial Property Standard Enquiries or “CPSEs” which are a standard set of questions that answer most of the buyer’s questions about the property.
As the seller, you will be expected to supply replies to CPSEs as part of the contract pack. You should review the questions and consider how to answer them. This may help identify any potential issues that could arise in order that you can try and deal with or mitigate them.
The buyer will likely come back with more questions, but the fewer issues they raise the less impact this will have on the transaction.
Gather your property documents:
The buyer will want to see a number of documents in relation to the property, including:
Title: the buyer will want to see evidence of your title to the property and/or a copy of the lease if you hold a leasehold interest in the property. Depending on the type of transaction and how important the property is, the buyer may want to see some of the underlying documents from when the property was purchased by or leased to you.
Planning Permissions: a buyer will want to ensure that the property has all necessary planning permissions. Buyers will be specifically be interested in the use of the property and whether it is being used in accordance with any planning permissions. You should ensure that these are readily available to the buyer or consider how to answer questions about missing planning permissions.
Asbestos Report: property owners or occupiers are required to manage the risk of asbestos in their commercial property. You will want to check your records to see if you hold a valid asbestos report for your property which will establish whether the property contains asbestos or not. If you do not have a report, you should consider commissioning one or be able to confirm why one is not required.
Fire Risk Assessment: those responsible for a commercial building will be required to carry out a fire risk assessment. The fire risk assessment identifies any fire risks at a property and sets out recommendations and action points to minimise the fire risks. You will need to provide this report to the buyer on any sale of the property so should check your records to ensure that you have this to hand, and if not commission one. You should also consider whether the recommendations and action points have been dealt with and how to answer questions on this.
Identify any gaps:
Reviewing the CPSEs and collating relevant documents early in the transaction will allow you to identify any gaps in information, and any potential issues. It will also allow you time to consider how to deal with potential issues and obtain further documentation.
This will increase the likelihood that the wider corporate transaction runs smoothly and is not delayed by any minor enquiries raised by the buyer in respect of the property. It also minimises the risk of potential price chipping by the buyer if issues come out at a late stage.
If you would like further information about preparing for the sale of your business or a related matter, get in touch with Siobhan Williams via email on swilliams@darwingray.com, or call on 029 2082 9124 for a free, no obligation conversation.
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