A guide for streamlining commercial property transactions
Given the uncertain market we currently find ourselves in, it has become increasingly important for sellers to ensure that their properties are in a position to be sold as soon as Heads of Terms are agreed.
The Investment Property Forum published guidance aimed at improving the attractiveness of real property as an asset class. This is known as "Readiness for Sale – the Code of Practice for Streamlining Commercial Property Transactions" initially published in 1996 but recently updated in light of today’s economic climate.
The recommendations are intended to increase the speed of commercial property transactions, thereby enhancing the liquidity of real property.
Transactions tend to take longer in challenging market conditions; however, delays can be caused or exacerbated by the provision of inadequate management information, missing title deeds, defects in title, adverse rights, and physical deficiencies. Some of these difficulties can be circumvented by the seller and its advisors having thoroughly familiarised themselves with the property and its title before marketing it.
It is also crucial in the current economic climate that properties are 'ready for sale' so as to avoid buyers seeking to renegotiate the agreed price.
Data sites may merit consideration - sellers are able to store and index deeds and up-to-date property information in an electronic database through which access can be given to potential buyers. Access can be tailored to suit the parties' needs and can be monitored as a gauge of progress in the transaction. This type of site is also particularly useful when there are more than two firms of solicitors involved in the due diligence, as for example when dealing with a portfolio of properties located in multiple jurisdictions.
Our summary checklist details the type of information and documentation that should be made available to a prospective buyer at an early stage.