With the commercial property market picking up, banks are becoming more willing to accept commercial premises as security. As ever, the pressures are high and the timescales are short. But, as a customer, what could you do to speed things up?
1. Check your boundaries
One of the first questions to consider is “what is actually owned?” It sounds simple but we commonly encounter discrepancies between the Valuer’s site plan and the Land Registry Title Plan. This could easily be avoided by providing an accurate plan from the outset.
2. Don’t delay, search today!
Once you have agreed the key terms of your loan, instruct your solicitor to undertake the property searches. These will reveal issues which may require further investigation and in some cases can take weeks to be turned around. Also, consider your location. Are you near a river? Is the proposed HS2 line running nearby? Make sure your solicitor is aware of anything which may require further searches to be undertaken. Any delay could get your transaction off to a sluggish start.
3. Planning can be key
No one knows a property better than its owner. If you have previously obtained planning permissions or have carried out any works at the property then make sure your documents are in order and that you have the necessary evidence that all pre-development conditions have been complied with. Be sure to approach the Local Planning Authority as early as possible.
4. Speak to your insurance broker
As completion approaches there’s often a rush to get buildings’ insurance policies amended. Most lenders will require that they are either noted on or listed as co-insured on your policy, so understand the bank’s requirements early on and speak to your insurance broker in good time.
5. The devil is in the detail
As a seller, you will be asked to reply to ‘Commercial Property Standard Enquiries’ (CPSE’s). The better the quality of information you provide, the quicker the buyer’s solicitor will be able to address any issues. Spend time on these and you will save time throughout the process.
6. Contact primary / existing lender
Whether you are looking to refinance or you are granting a second charge, you will need to make contact with any existing lender early on in the process. If you are refinancing then you will need to obtain a redemption figure prior to the existing charge being discharged. If you are granting a second charge, your existing lender’s consent will be required. Either way this could stall your transaction so be pro-active and contact your existing lender at the start.
7. Be upfront
Have you breached any restrictive covenants? Or extended the property without planning consent? If you are aware of any problems or title defects affecting the property, then be upfront and make your solicitor aware. It’s better to mention these at the outset than for your lender to find these out at the end when they could become an obstacle. Banks don’t like surprises!
8. Looking after the environment
Do you use the property for any hazardous purposes or are you aware of the property having been used for hazardous purposes in the past? If you have ever been required to undertake remediation works or have had environmental surveys carried out then your lender will require details. Many lenders require reports to be re-addressed or for Letters of Reliance to be issued by the author, so dig these out as soon as possible.
9. Who is in occupation?
If your property is subject to leases then your lender will need to make sure that the leases are being properly managed. If any rents have not been paid or rent reviews remain outstanding then try and get these in order and make sure your lender is fully aware of the position. Any shortfall in rent being paid could affect the value of your property so any discrepancies must be disclosed.
10. Is your property a construction site?
If you are in the process of developing your property then your lender will want to consider any construction documents. In particular, they may require any guarantees or warranties from contractors to be assigned for their benefit. This can add time to your transaction so make sure your lender is involved as early as possible.
Let us know if we have missed any tips that have helped you in this context. For more information contact Richard Tindall, RTindall@gateleyuk.com.