Commercial property is a significant investment. The conveyancing process for commercial property remains largely the same as residential property when it comes to negotiating and confirming an agreement, and when it comes to the settlement transaction itself. However, there are some added factors to consider when it comes to commercial property. This includes things like financial approval; due diligence; insurance; unit titles; GST/tax implications and commercial tenancies. This is why it is important to invest in the right legal advice before you buy.
You should always make sure your agreement for sale and purchase contains a finance condition. Banks generally require a higher deposit for commercial properties (and require higher repayments and interest rates). You should always keep communication up with your bank and speak to them first to make sure you can satisfy your finance condition and make your agreement unconditional.
Commercial properties tend to be larger in scale, more specialised and more expensive than residential properties. In addition to a LIM and a Building Report, you should look out for things like the appeal to prospective tenants; building fitness and compliance; zoning rules and council restrictions; whether there are existing tenants and what lease arrangements are in place. Depending on the property and the complexity of arrangements, you may need to consider increased costs if more in-depth reports and surveys are required. But remember – the costs of carrying out your due diligence are very minor compared to investing in the wrong property!
When you are purchasing a Commercial property that already has an existing tenant it s important that you understand the existing Lease Document and how that may impact you and your ownership of the Property. We are able to review the documentation and explain to you in plain English what your and the tenants obligations are.
Things like the commercial activity intended to be carried out on the property and the state of the property itself, will determine the type of insurance you will need. Generally, insurance premiums for commercial properties are a lot higher than residential properties, so talk to your insurance company.
If the building is a unit title, this is a whole other kettle of fish. Your responsibilities as the owner will be different, and you will be part of the body corporate. This will involve regular meetings with other owners, and the payment of body corporate levies (for things like maintenance, insurance and administration fees).
So if you're looking for effective legal solutions from people who'll put you first - then call us today on (06) 758 7101 or request an appointment.