Legal pitfalls to avoid: Common issues in commercial real estate transactions

If you’ve ever purchased a house before you’ll know the intricacies involved in purchasing a property, the same principles apply in buying commercial property, with just as much risk that something won’t go according to plan. In this guide, we’ll be exploring some of the common issues that can occur during commercial property transactions, so you have a key insight into how you could possibly avoid the pitfalls and ensure your commercial property purchase goes as smoothly as possible.


Managing delays and complications

Even though the process for purchasing a commercial property follows a common timeframe that the sale does complete in many cases, there are instances when unexpected delays and complications arise. As a result, the length of the process can be extended, which is naturally frustrating for the buyer and the seller.

Delays and complications can arise for several reasons such as the buyer’s due diligence raising queries regarding the property that need additional investigation, or delays in the buyer organising the finance they are using the buy the property.

Depending on the exact reason for the delay, it could be that the buyer tries to re-negotiate the terms of the sale or walk away from it completely. To avoid this, it’s important that both parties maintain regular, honest communication with each other, managing expectations, and ensuring neither side is left experiencing a long delay without a reason or explanation.


How can the seller avoid delays?

One way to avoid delays and problems during your commercial transaction as a seller is to be familiar with the due diligence process in which any interested buyer will follow. For instance, you’ll know that you’ll be asked to answer the Commercial Property Standard enquiries so it can save a good amount of time to have your replies already prepared. Or at least have an awareness of the types of enquiries they are likely to raise, so you can have the relevant information and supporting documents ready.

A good example of this is that in the majority of cases, apart from exceptional circumstances, commercial properties are required to have an EPC (Energy Performance Certificate) rating of E or above. Also, building owners have a legal obligation to prove that any asbestos is being suitably managed. These are standard requirements, so by having this documentation up to date and readily available, you can help the transaction to go quickly and smoothly.


Legal recourse

This applies if there has been a breach of contract, for example if the buyer fails to complete the purchase on the pre-agreed date or doesn’t transfer the balance on completion day. It is not the most common occurrence for a buyer to pull out of the sale and breach their contract, but it can happen. If that is the case, as a seller may want to consider legal solutions such as:

  • Damages – you might be interested in pursuing monetary recompense for any damages you’ve incurred due to the breach of contract.
  • Specific performance – the court has the authority to mandate the purchaser to fulfil their responsibilities as per the agreement, thereby finalising the acquisition of the property and making the entire payment.
  • Termination – The contract you have with the purchaser should outline the conditions under which termination is permissible, implying that you could potentially dissolve the agreement with that purchaser and possibly sell to a different one. Thoroughly review your agreement and search for the explicit violations that would grant you the authority to terminate.
  • Return the deposit – The agreement should also detail the conditions under which you can keep the deposit if the purchaser violates the terms.


Other challenges of commercial conveyancing

As you can see there are many intricacies involved in commercial property transactions and with the substantial amounts of money being involved, it’s an important process that should be handled with care. Apart from the above, other common challenges that can arise during commercial conveyancing include:

  • Changing regulations – the legal landscape changes fairly regularly with new regulations or requirements being put in place that might impact a property transaction.
  • Negotiating terms – often there are several parties involved which can lead to some disagreements on the terms of the sale. If parties cannot agree it can result in long delays or potentially the buyer pulling out completely.
  • Unforeseen problems – the buyer’s due diligence and checks may uncover some unexpected issues like structural flaws or environmental challenges.



Hopefully this guide has given you a greater awareness of what can cause issues during a commercial transaction, so you know what to look out for and how to prepare. One of the best ways to start your transaction in the right way, whether you’re a buyer or a seller is to use professional and reliable commercial conveyancing solicitors.

The team at Toomey Legal have extensive experience in online conveyancing Newcastle and are committed to helping local buyers and sellers complete their transactions as efficiently as possible. Get a quote today or don’t hesitate to contact us if you have any questions about how we can support you.