Commercial landlords: what to do if you want to sell your property
PUBLISHED: 16:17 26 February 2019
Caroline Linsdell, a partner at Cozens-Hardy solicitors, offers her advice to commercial landlords who may be considering a sale.
Last month in this column we looked at what a commercial landlord could do in the event of a tenant wanting to dispose of its lease and walk away. This month, let’s consider the reverse situation, where the landlord wants to dispose of the freehold interest in the property.
To sell with tenants?
Assuming that the property is currently let, the first step is to review the current leases – are they approaching expiry? If so, you, the landlord, need to take advice.
Should you leave it to the purchaser to deal with the leases as and when they come to an end, or should you be proactive and get new leases in place, potentially increasing the investment value of the property?
Does any tenant have a right of first refusal if the property is to be sold? The lease may have been granted 10 or more years ago, and it would be easy to overlook it. Are there any outstanding rent reviews that have still to be decided?
...or with vacant possession?
Alternatively, is the property better suited to a sale with vacant possession, attracting buyers who want to take on an empty property, possibly as an owner-occupier? If so, do the current tenants have any rights to renew their leases? What are the cost implications of buying them out?
Such decisions will certainly need advice from a valuer and will be shaped by what is happening in the local market.
Prepare to sell
Having decided how best to market the property, speak to your solicitor and consider putting together a full sales pack, including replies to the standard pre-contract enquiries, with all supporting documents. Is there is a current EPC?
Are all asbestos reports, health and safety files etc up-to-date? Consider obtaining any reports which a buyer might ask for and which you do not have. Do you have the benefit of any collateral warranties that will have to be assigned (ie transferred) to the new freeholder?
In today’s market, the more work that is done in advance, the easier the sale will progress, leaving little wriggle room for renegotiation by the buyer. Take advice early on as how best to market the property and then get your legal team to put everything together so that you are ready for when that all-important sale is agreed.
Visit www.cozens-hardy.com for more information.