The commercial and legal issues involved when acquiring a commercial property using finance can vary greatly depending on the nature of the property, intended use, type of lender and the lender’s requirements.
Here are five key matters that purchasers and/or borrowers should consider.
It might sound obvious, but it is always worth discussing your requirements with a mortgage broker who is familiar with the type pf property you are acquiring and the nature of financing you require. This could save you money in the long term and ensure that you get the best deal that is the most appropriate for your transaction. Here are some possible questions to consider:
Depending on the nature of the lender they may require more than simply a legal charge over the property being acquired. Here are some of the additional security documents that might be required:
It is not just the purchase price and stamp duty land tax that needs to be paid. You will need to make sure you will have the funds needed to cover the deposit, legal costs, lender’s legal fees, any additional fees payable to the lender, indemnity insurance premiums that the lender might require, legal fees for a guarantor, any cash deposit required by the lender (see above), valuation fees required by the lender and the lender’s arrangement fee. All of these can add up so be sure that the loan will be sufficient to cover everything along with your own funds.
If the lender is instructing their own solicitor (as opposed to your solicitor acting for both the lender and you) the lender’s solicitor will require an undertaking for their fees so establish what these are early on. If the costs undertaking cannot be given quickly this can hold up matters significantly. Also check whether you will get these funds back if the matter aborts. Ordinarily these would not be returned if the transaction does not go ahead.
If a broker is involved, they should enquire about the lender’s requirements as early as possible so that your solicitor can raise further enquiries of the seller’s solicitor if needs be. If there are any particular matters that you need to deal with then make sure they are on top of these to avoid delays.
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